UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                             FORM 10-KA

               Annual Report Pursuant to Section 13 or 15 (d) of
                      the Securities Exchange Act of 1934

                    FOR FISCAL YEAR ENDED DECEMBER 28, 1997

                         COMMISSION FILE NUMBER 1-6553


                        CARROLS CORPORATION
            (Exact name of Registrant as specified in its charter)

         DELAWARE                                            16-0958146
(State             or             other             jurisdiction             of
(I.R.S. Employer
                    incorporation                or               organization)
Identification No.)

     968 JAMES STREET
    SYRACUSE, NEW YORK                                           13203
(Address of principal executive office)                         (Zip Code)

      Registrant's telephone number, including area code:  (315) 424-0513

Securities registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act:

                        11-1/2% SENIOR NOTES DUE  2003
                               (Title of Class)

   Indicate  by check mark whether the Registrant (1)  has  filed  all  reports
required to be  filed  by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding  12  months  (or  for  such  shorter  period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes _ X No___

   Indicate by check mark if disclosure of delinquent filers pursuant  to  Item
405  of  Regulation S-K  is not contained herein, and will not be contained, to
the best of  the  registrant's  knowledge,  in  definitive proxy or information
statements incorporated by reference in Part III  of  this  Form  10-K  or  any
amendment to this Form 10-K. [X]

   The aggregate market value of the voting stock held by non-affiliates of the
Registrant:   NO VOTING STOCK IS HELD BY NON-AFFILIATES.

   The  number  of  shares  outstanding  of each of the Registrant's classes of
common stock, as of March 15, 1998:  10.


<PAGE>
THE COMPANY USES A 52-53 WEEK FISCAL YEAR  ENDING  ON  THE  SUNDAY  CLOSEST  TO
DECEMBER  31.   ALL  REFERENCES  HEREIN TO THE FISCAL YEARS ENDED  DECEMBER 31,
1995, DECEMBER 29, 1996  AND DECEMBER  28, 1997 WILL HEREINAFTER BE REFERRED TO
AS THE FISCAL YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997, RESPECTIVELY.

                                    PART I

   THIS 1997 ANNUAL REPORT ON FORM 10-K  CONTAINS  STATEMENTS  WHICH CONSTITUTE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF  THE SECURITIES
ACT  OF  1933,  AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE  ACT  OF
1934, AS AMENDED.   THOSE  STATEMENTS  INCLUDE STATEMENTS REGARDING THE INTENT,
BELIEF  OR  CURRENT EXPECTATIONS OF THE REGISTRANT  AND  ITS  MANAGEMENT  TEAM.
INVESTORS ARE  CAUTIONED  THAT  ANY  SUCH  FORWARD-LOOKING  STATEMENTS  ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND  THAT
ACTUAL  RESULTS  MAY  DIFFER  MATERIALLY  FROM  THOSE PROJECTED IN THE FORWARD-
LOOKING STATEMENTS.  SUCH RISKS AND UNCERTAINTIES  INCLUDE, AMONG OTHER THINGS,
COMPETITIVE, ECONOMIC AND REGULATORY FACTORS, GENERAL  ECONOMIC CONDITIONS, THE
ABILITY OF THE REGISTRANT TO MANAGE ITS GROWTH AND SUCCESSFULLY  IMPLEMENT  ITS
BUSINESS STRATEGY AND OTHER RISKS AND UNCERTAINTIES THAT ARE DISCUSSED HEREIN.

ITEM 1.     BUSINESS

HISTORICAL DEVELOPMENT

   Carrols  Corporation  ("Carrols" or the "Company") is the largest franchisee
of Burger King restaurants   in  the  United  States.    As  of  March 15, 1998
Carrols  was  operating 338 Burger King restaurants located in 13 Northeastern,
Midwestern and  Southeastern  states.   During the Company's most recent fiscal
year, the Company increased the total number of restaurants that it operates by
over 40% growing from 232 restaurants in  1996  to  335 restaurants at December
31,  1997.   During  1997,  Carrols  opened  11  new restaurants,  acquired  93
restaurants in 6 transactions, and closed one underperforming restaurant.

    Carrols was incorporated in 1968 and through 1976  its  principal  business
was  the  operation  of  fast food hamburger restaurants under the name Carrols
Restaurants and the operation  of movie theaters under the name CinemaNational.
In 1976, as a result of growing  competition  from larger and better recognized
national fast food restaurant chains, Carrols became  a  franchisee  of  Burger
King Corporation ("BKC") and began converting its  restaurants into Burger King
restaurants and ceased operating and franchising restaurants under the name  of
Carrols Restaurants. In order to facilitate the  financing of the conversion of
these  restaurants,  Carrols  disposed  of  a  substantial portion of its movie
theater assets.

   In  1969,  Carrols  offered  its  common  stock through  an  initial  public
offering. The Company's shares were listed for  trading  on  the New York Stock
Exchange in 1983.

   The  Company  was  acquired  in  December  1986 (the "1986 Acquisition")  by
Carrols Holdings Corporation ("Holdings"), a corporation  formed  to effect the
1986  Acquisition by Mr. Vituli, the Company's current Chairman and  CEO,   and
other members  of  the  Company's  then-current  senior  management,  a private
investor  group  and certain institutional investors.  As a result of the  1986
Acquisition, Carrols became a wholly-owned subsidiary of Holdings.

   At the time of  the  1986  Acquisition,  the  Company  owned 138 Burger King
restaurants and a food distribution business. In August 1990,  the Company sold
its food distribution business to Burger King Distribution Services ("BKDS"), a
division  of  BKC.   Carrols  currently  purchases  substantially  all  of  its
requirements  for  foodstuffs  and  paper and packaging products from ProSource
Services Corporation ("ProSource"), the  successor  to BKDS, pursuant to a five
year supply agreement which expires on March 31, 1999.

      ATLANTIC  ACQUISITION.   On  April 3, 1996, pursuant  to  the  Securities
Purchase Agreement (the "Atlantic Agreement"), dated as of March 6, 1996, among
Carrols, Holdings, the stockholders  of Holdings and Atlantic Restaurants, Inc.
("Atlantic"), Atlantic acquired Holdings,  the owner of 100% of the outstanding
capital stock of the Company (the "Atlantic  Acquisition").   Pursuant  to  the
Atlantic  Agreement,  Atlantic  acquired  all of the outstanding voting capital
stock  of  Holdings  for an aggregate purchase  price  of  approximately  $86.5
million in cash. Atlantic  is  an  indirect  wholly-owned subsidiary of Bahrain
International Bank (E.C.), a Bahrain exempt joint stock company ("BIB").

RECENT DEVELOPMENTS

   Recapitalization.  On February 20, 1997, the Certificate of Incorporation of
Holdings was amended (the "Amendment") such that  (i)  the  3,146,110 shares of
Common  Stock  held  by Atlantic were converted into 850,000 shares  of  Common
Stock, (ii) each of the  classes consisting of (a) 882,353 shares of Non-Voting
Common Stock of Holdings,  (b)  750 shares of Class B 10% Cumulative Redeemable
Preferred Stock (Series I) of  Holdings, par value $0.01 per share, and (c) 750
shares of Class B 10% Cumulative  Redeemable  Preferred  Stock  (Series  lI) of
Holdings,  par  value  $.01  per  share, was canceled and (iii) the outstanding
warrants  to  purchase 488,111 shares  of  Common  Stock  were  converted  into
warrants to purchase  131,876  shares  of Common Stock.  After giving effect to
the foregoing, Holdings had 850,000 shares  of Common Stock outstanding, all of
which were held by Atlantic, with no other voting capital stock outstanding.

   MADISON  DEARBORN  INVESTMENT.   On March 27,  1997,  pursuant  to  a  Stock
Purchase Agreement (the "MD Agreement")  dated  February  25, 1997, between and
among Holdings, Atlantic, Madison Dearborn Capital Partners,  L.P.  and Madison
Dearborn  Capital  Partners  II,  L.P.  (together with Madison Dearborn Capital
Partners,  L.P.,  the  "MD Investors"), the  MD  Investors  acquired  (the  "MD
Investment") (i) from Holdings  283,334  shares  of Common Stock (the "Holdings
Shares") and (ii) from Atlantic  283,333 of the outstanding  shares  of  Common
Stock  (the "Atlantic Shares," and, together with the Holdings Shares, the  "MD
Shares").   Pursuant  to the MD Agreement, certain members of senior management
also purchased 10,810 shares  of  Common Stock for $1.1 million.  The aggregate
purchase price for the MD Shares was approximately $61 million in cash (the "MD
Purchase Price"), of which approximately one-half was paid to Holdings.

   TCB CREDIT FACILITY.  On May 12,  1997 the Company and Holdings entered into
a new financing agreement (the "TCB Refinancing") pursuant to which Chase/Texas
Commerce  Bank National Association ("TCB"),  as  Administrative  Agent  for  a
syndicate of  lenders  (the "Lenders"), (i) established a $25 million Revolving
Credit Facility that replaced  the existing Senior Secured Credit Facility with
Heller Financial, Inc. ("Heller")  and  (ii) established a $127 million Advance
Term Loan ($5 million of which was used to  replace an existing $5 million term
loan with Heller).

    OMEGA ACQUISITION.  On March 28, 1997, the  Company acquired 23 Burger King
restaurants   (including   one  restaurant  under  construction)   located   in
Greenville, North Carolina and  Spartanburg,  South  Carolina, for an aggregate
purchase price of $21.1 million in cash, pursuant to two  separate Purchase and
Sale Agreements, each dated as of January 15, 1997, by and between the Company,
Omega Food Services, Inc. and Harold W. Hobgood as Omega's agent.

   BUFFALO ACQUISITION.  On August 20, 1997 the Company acquired 63 Burger King
restaurants located in Western New York, Pennsylvania, Indiana and Kentucky for
an aggregate purchase price of approximately $52 million in cash, pursuant to a
Purchase Agreement, dated as of July 7, 1997, among the Company  and Richard D.
Fors,  Jr.,  Charles  J.  Mund, Charles J. Mund, Jr., Eric W. Mund, William  J.
O'Donnell, John T. Sweeney,  William  J. Reznicek and certain other individuals
and entities signatory thereto.

BUSINESS STRATEGY

   Carrols business strategy is to continue  to  increase  revenues and improve
operating  efficiencies  thus  increasing  restaurant  profits and  EBITDA  (as
defined).  The Company's strategy is based on the following components:

   DEVELOP NEW BURGER KING RESTAURANTS IN EXISTING MARKETS.   The Company looks
to  expand in its existing markets through the development of new  Burger  King
restaurants  where  the  demographics support the Company's ability to increase
profitability and operating  leverage.  The Company believes that the number of
markets that it operates in will  continue  to  provide  opportunities  for the
construction  of  new  restaurants.   Management  believes  that new restaurant
development  risk  is  significantly reduced due to the proven success  of  the
Burger King concept.

   The Company's new restaurant   development  efforts are primarily managed by
its  own staff of real estate and construction professionals  with  input  from
BKC's  development  field personnel.  Prior to developing a new restaurant, the
Company conducts an extensive  site  selection and evaluation process including
in-depth demographic, market and financial analysis.

   SELECTIVE  ACQUISITION OF EXISTING BURGER  KING  RESTAURANTS.   The  Company
believes that due  to  the  number of Burger King restaurants and the number of
franchisees within the Burger  King  system  that  there  will  continue  to be
opportunities  for  selective  growth through acquisition in contiguous and new
geographic  markets.  When evaluating  acquisition  opportunities  the  Company
assesses the  attractiveness  of  the  market  from  a  demographic perspective
including the potential for the development of new restaurants.

   The  Company  believes  that  its restaurant operating controls,  management
training and administrative efficiencies generally enable it to realize greater
profitability from acquired restaurants  than  the  former owners realized.  It
believes  that  it  achieves profit efficiencies from its  ability  to  improve
controls over restaurant  food  costs,  more  efficient labor usage, and by its
ability   to   realize   economies  of  scale  by  leveraging   its   corporate
infrastructure.

   CONSISTENTLY PROVIDE HIGH  QUALITY  PRODUCTS  AND SUPERIOR CUSTOMER SERVICE.
As  the  number of restaurants that the Company owns  in  a  particular  market
increases,  the  Company  has  a  greater  ability  to  ensure overall customer
satisfaction  in that market through consistency in food quality,  service  and
restaurant appearance.   Its  stronger  presence  in  a  particular market also
allows  the  Company  to  maximize  the  effectiveness  of  local  Burger  King
advertising and promotional programs.

   ACHIEVE OPERATING EFFICIENCIES.  The Company's large number  of restaurants,
centralized management structure and management information systems  enable the
Company to improve operating efficiencies for both existing and newly  acquired
restaurants.   These  factors  enable the Company to tightly control restaurant
and corporate level costs, to capture  economies  of  scale  by  leveraging its
existing corporate overhead structure, and to use its sophisticated  management
information and point-of-sale systems to more efficiently manage its restaurant
operations.   Due  to  its  size,  the Company also realizes benefits from  its
improved bargaining power with respect  to  its  purchasing and cost management
activities.

   BURGER KING CORPORATION

   Overview.  The Company believes that it realizes  significant  benefits from
its  affiliation  with  BKC  as a result of the widespread recognition  of  the
Burger King name and products,  the  size and market penetration of BKC's media
advertising, BKC's overall management  of  the Burger King brand, including new
product development, and from the continued  growth  of the Burger King system.
According  to  publicly available information, the Burger  King  brand  is  the
second largest restaurant  franchised in the world, with more than 9,400 Burger
King restaurants worldwide and system-wide restaurant sales of $9.8 billion for
its fiscal year ended September  30,  1997.   BKC  is  an indirect wholly owned
subsidiary of Diageo PLC (a United Kingdom food and spirits company formed from
the merger of Grand Metropolitan and Guinness).

   MENU  AND  OPERATIONS.  The  Burger  King  system  marketing   strategy   is
characterized  by  its  "Have  It  Your  Way" service, flame-broiling, generous
portions and competitive prices. Burger King  restaurants feature flame-broiled
hamburgers,   the  most  popular  of  which  is  The  Whopper{<reg-trade-mark>}
sandwich.  The Whopper<reg-trade-mark> is a large, flame-broiled hamburger on a
toasted bun garnished with combinations of mayonnaise, lettuce, onions, pickles
and tomatoes.

   The basic menu  of  all  Burger  King  restaurants  consists  of hamburgers,
cheeseburgers,  chicken  and  fish  sandwiches,  breakfast items, french  fried
potatoes, salads, shakes, desserts, soft drinks, milk and coffee.  In addition,
promotional menu items are introduced periodically  for  limited  periods.  BKC
continually  seeks  to develop new products as it endeavors to enhance the menu
and service of Burger King restaurants.

   The Company's Burger King restaurants are typically open seven days per week
with  minimum  operating  hours  from  7:00  AM  to  11:00  PM.    Burger  King
restaurants are  fast  food restaurants of distinctive design and are generally
located in high-traffic  areas  throughout  the  United  States.   The  Company
believes  that  convenience  of  location, quality of food, price/value of food
served, and speed of service are the  primary  competitive advantages of Burger
King  restaurants.   Burger King restaurants appeal  to  a  broad  spectrum  of
consumers, with multiple  day-part  meal segments appealing to different groups
of consumers.

   RESTAURANT CONFIGURATIONS.  The Company's Burger King restaurants consist of
one  of  several  building  types  with  various   seating  capacities.   BKC's
traditional restaurant contains approximately 2,800  to  3,200 square feet with
seating capacity for 90 to 100 customers,  has drive-thru  service windows, and
has  adjacent parking areas.  Of the Company's 338 restaurants,  at  March  15,
1998,  316 are free-standing and 22 are located in retail shopping centers.  In
Carrols'  freestanding  Burger King restaurants over 55% of sales are generated
from its drive-thru service windows.



   FRANCHISE AGREEMENTS.

   Each of Carrols' Burger King restaurants operates under a separate Franchise
Agreement entered into between  the  Company  and BKC. The Franchise Agreements
require, among other things, that all restaurants be of standardized design and
be  operated  in  a prescribed manner, including utilization  of  the  standard
Burger King menu.   The  Franchise  Agreements generally provide for an initial
term of 20 years and have an initial  fee  of  $40,000.   A Successor Franchise
Agreement  may  be  granted  by  Burger  King for an additional 20  year  term,
provided the restaurant meets the then-current  BKC operating standards and the
Company is not in default under the relevant Franchise  Agreement.   Currently,
the Successor Franchise Agreement fee is $40,000. The Franchise Agreements  are
non-cancelable except for failure to abide by the terms thereof.

   In addition to this fee, in order to obtain a Successor Franchise Agreement,
a  franchisee is typically required to make capital improvements to the subject
restaurant  to  bring the restaurant up to BKC's then-current design standards.
The amount of such  capital  expenditures  will  vary widely depending upon the
magnitude of the required changes and the degree to  which the Company has made
interim  changes  to  the  restaurant. Although the Company  estimates  that  a
substantial remodeling can cost  in  excess  of $250,000, the Company's average
remodeling cost over the past five years has been  approximately  $135,000  per
restaurant.

   Carrols  believes  that  it  enjoys a good relationship with BKC and that it
will  satisfy  BKC's  normal  Successor   Franchise   Agreement  policies  and,
accordingly, believes that Successor Franchise Agreements  will  be  granted in
due  course  by  BKC  at  the  expiration of its existing Franchise Agreements.
Historically, BKC has granted each  of  the  Company's requests for a Successor
Franchise Agreement for its restaurants.

   In addition to the initial franchise fee, Carrols  currently  pays a monthly
royalty  of  3-1/2% of the gross revenues from its restaurants to BKC.   Burger
King franchisees  currently  also  contribute  4%  of gross revenues from their
Burger King restaurants to fund BKC's national and regional  advertising.   BKC
engages  in  substantial  national  advertising  and promotional activities and
other  efforts  to  maintain  and enhance the nationwide  Burger  King  system.
Carrols supplements BKC's marketing  with  local  advertising  and  promotional
campaigns.

   The  cost  of  a  new  restaurant  also  includes  the  requisite equipment,
furniture,  signage  and various other costs.  The Company estimates  that  the
average initial cost for  a  standard free-standing restaurant is approximately
$265,000 (excluding the cost of  the building, land and site improvements). The
Company estimates that the  aggregate  cost  of  constructing  a  free-standing
restaurant  and  the  cost  of  land  and site improvements varies considerably
depending upon building type, land cost  and  site  work,  and generally ranges
from $700,000 to $1,000,000.

   The BKC Franchise Agreements do not grant any franchisee exclusive rights to
a defined territory.  The Company believes that BKC generally  seeks  to ensure
that newly granted franchises do not materially adversely affect the operations
of existing Burger King restaurants.

   The Company is required to obtain BKC's consent prior to the acquisition  or
development  of  new  Burger King restaurants.  BKC also has the right of first
refusal to purchase any  Burger  King  restaurant  which  is  the  subject of a
contract of sale.  Since the Acquisition, BKC has granted its approval  to  all
of  the  Company's  acquisitions, except for one instance when it exercised its
right of first refusal  with respect to one proposed six restaurant acquisition
that the Company attempted to make in 1997.

COMPANY OPERATIONS

   MANAGEMENT  STRUCTURE.  Substantially  all  executive  management,  finance,
marketing and operations  support  functions  are  conducted  centrally  at the
Company's  Syracuse,  New  York  headquarters.   The  Company currently has six
regional directors, five of whom are vice presidents of  the  Company,  who are
each responsible for the operations of the Carrols' Burger King restaurants  in
their  assigned  region.  Three of the regional directors have been employed by
Carrols for over 20 years.  The regional directors are supported by 44 district
supervisors that are responsible  for  the  direct  oversight of the day-to-day
operations of an average of seven restaurants.  Typically, district supervisors
have previously served as restaurant managers at one of Carrols' restaurants or
at  an acquired restaurant.  Both regional directors and  district  supervisors
are compensated  with  a  fixed  salary  plus an incentive bonus based upon the
performance of the restaurants under their supervision.

   A typical Carrols' Burger King restaurant  is  staffed with hourly employees
who are supervised by a salaried manager and two or  three  salaried  assistant
managers.

   TRAINING.   The  Company  maintains a comprehensive training and development
program for all of its personnel.   This  program  emphasizes  the  Burger King
system-wide operating procedures, food preparation methods and customer service
standards.  Carrols provides both classroom and in-restaurant training  for its
salaried  and  hourly  personnel.  In addition, BKC's  training and development
programs are also available to the Company.

   MANAGEMENT INFORMATION SYSTEMS. Financial and management control of Carrols'
restaurants is facilitated by the use of an integrated computerized back office
and point of sale system  which  electronically transmits data from each of the
Company's  restaurants to Corporate  headquarters  on  a  daily  basis.   These
systems provide  daily  tracking and reporting of customer traffic counts, menu
item sales,  payroll data,  food  and  labor  cost analyses and other operating
information for each restaurant.  This information  is  available  daily to the
restaurant manager, who is expected to react quickly to trends or situations in
his or her restaurant.  The district supervisors also receive daily information
for  all  restaurants  under  their  respective control and have access to  key
operating  data on a remote basis using  a  laptop  computer.   Key  restaurant
performance  indicators  are  monitored  at each management level from district
supervisor through senior management.

   The  Company's  management information system,  typically  not  utilized  by
smaller Burger King  franchisees  and  other  smaller  quick-service restaurant
chains, provides management with the ability to analyze  sales  and product mix
data, to minimize shrinkage, and to control labor costs.  Carrols believes that
these  systems materially enhance its ability to more efficiently  control  and
manage its restaurant operations.

   FACTORS AFFECTING THE COMPANY'S OPERATIONS. Carrols' business is affected by
various  factors  including  weather,  gasoline  prices  and road construction.
Winter weather conditions can be particularly severe in the Northeast where the
Company operates a large number of its Burger King restaurants.   Historically,
the Company's business has also been affected by changes in local and  national
economic  conditions, demographic trends, consumer spending habits and  tastes,
and concerns about the nutritional quality of quick-serve food.


   SITE SELECTION. The Company believes that the location of its restaurants is
very important  to  each restaurant's success.  Potential new development sites
are evaluated based upon  accessibility, visibility, costs, surrounding traffic
patterns, competition and demographic  characteristics.  The  Company's  senior
management,  based upon analyses prepared by its real estate professionals  and
its operations  personnel,  determines the acceptability of all acquisition and
new development sites.

RESTAURANT LOCATIONS

   The  following  table sets forth  the  locations  of  the  338  Burger  King
restaurants in the Carrols' system at March 15, 1998.


<TABLE>
<CAPTION>
                                                                 Total
STATE                                                         RESTAURANTS
<S>                                                 <C>
Connecticut                                                 1
Indiana                                                     5
Kentucky                                                    6
Maine                                                       4
Massachusetts                                               2
Michigan                                                    23
New Jersey                                                  2
New York                                                    151
North Carolina                                              41
Ohio                                                        72
Pennsylvania                                                11
South Carolina                                              19
Vermont                                                            1
    Total                                                   338
</TABLE>
ADVERTISING AND PROMOTION

   The Company believes that one of the major advantages of being a Burger King
franchisee  is the value of the extensive regional and national advertising and
promotional programs conducted by BKC. In addition to the benefits derived from
BKC's advertising spending, which according to information published by BKC was
over  $400  million   for  1997,  Carrols  supplements  BKC's  advertising  and
promotional activities  with  local  advertising  and promotions, including the
purchase of additional television, radio and print  advertising.   Carrols also
utilizes promotional programs, such as combination meals and discounted prices,
targeted  to  its customers, thereby enabling Carrols to create a flexible  and
directed marketing program.

    Burger King  franchisees,  as  well as BKC-owned restaurants, are generally
required to contribute 4% of gross revenues  from  restaurant  operations to an
advertising fund, utilized by BKC for its advertising, promotional programs and
public  relations activities.  BKC's advertising programs consist  of  national
campaigns  supplemented  by local advertising.  BKC's advertising campaigns are
generally carried on television,  radio and in circulated print media (national
and regional newspapers and magazines).

SUPPLIES AND DISTRIBUTION

   The Company is a member of a national purchasing cooperative created for the
Burger King system known as Restaurant  Services,  Inc. ("RSI").  RSI is a non-
profit independent cooperative which acts as the purchasing  agent for approved
distributors  to  the system and serves to negotiate the lowest  cost  for  the
Burger King system.   The  Company  uses  its  purchasing  power  to  negotiate
directly  with  certain  other  vendors,  as well as its distributor, to obtain
favorable pricing and terms for supplying its restaurants.

   As a Burger King franchisee, Carrols is  required  to  purchase  all  of its
foodstuffs,  paper  goods  and packaging materials from BKC-approved suppliers.
Other non-food items such as  kitchen utensils, equipment maintenance tools and
other supplies may be purchased  from  any  suitable  source provided that such
items meet BKC product uniformity standards.

   Carrols  currently obtains substantially all of its foodstuffs  (other  than
bread  products   which   it  purchases  from  local  bakeries),  paper  goods,
promotional  premiums  and  packaging  materials  from  ProSource  Distribution
Services, Inc. ("Prosource")  under a five-year supply agreement  which expires
on  March  31,  1999.   The Company  believes  that  ProSource's  services  are
competitive with alternatives available to the Company.

   There  are  other  BKC-approved  supplier/distributors  which  compete  with
ProSource.  Carrols  believes   that   reliable  alternative  sources  for  all
restaurant supplies are readily available  at  competitive  prices  should  the
arrangements  with  ProSource  or  any  other  existing supplier or distributor
change.

   All BKC-approved suppliers are required to purchase  foodstuffs and supplies
from  BKC-approved  manufacturers  and  purveyors.   BKC  is  responsible   for
monitoring  quality control and supervision of these manufacturers and conducts
regular visits  to  observe  the  preparation of foodstuffs, and to run various
tests to ensure that only high quality  foodstuffs  are  sold  to  BKC-approved
suppliers.   In  addition,  BKC  coordinates  and supervises audits of approved
suppliers  and  distributors  to  determine  continuing  product  specification
compliance  and  to  ensure that manufacturing plant  and  distribution  center
standards are met.

QUALITY ASSURANCE

   The Company's operations  are  focused on achieving a high level of customer
satisfaction with speed, accuracy and  quality  of  service  closely monitored.
The Company's senior management and restaurant management staff are principally
responsible  for  ensuring  compliance  with the Company's and BKC's  operating
procedures.   The  Company  and  BKC  have  uniform   operating  standards  and
specifications  relating  to  the quality, preparation and  selection  of  menu
items,  maintenance and cleanliness  of  the  premises  and  employee  conduct.
Detailed  reports  from  the  Company's  own  management information system and
surveys  conducted  by  the  Company or BKC are tabulated  and  distributed  to
management on a regular basis to help maintain compliance.

   All Burger King franchisees  operate  subject  to a comprehensive regimen of
quality assurance and health standards set by BKC,  as well as standards set by
Federal,  state  and local governmental laws and regulations.  These  standards
include food preparation  rules  regarding, among other things, minimum cooking
times and temperatures, sanitation and cleanliness. The "conveyor belt" cooking
system utilized in all Burger King  restaurants,  which  is calibrated to carry
hamburgers through the flame broiler at regulated speeds,  is one of the safest
cooking systems among major quick-service restaurants and helps  to ensure that
the  standardized  minimum  times  and  temperatures  for cooking are met.   In
addition, BKC has set maximum time standards for holding unsold prepared food.

   The Company closely supervises the operation of all  of  its  restaurants to
help ensure that standards and policies are  followed and that product quality,
customer  service  and  cleanliness  of  the  restaurants  are maintained.   In
addition,  BKC may conduct unscheduled inspections of Burger  King  restaurants
throughout the nationwide system.

GOVERNMENT REGULATION

   Carrols is  subject  to  various Federal, state and local laws affecting its
business, including various health,  sanitation,  fire  and  safety  standards.
Newly  constructed  or  remodeled  restaurants  are  subject to state and local
building code and zoning requirements.  In connection  with  the remodeling and
alteration of the Company's restaurants, the Company may be required  to expend
funds   to  meet  certain  Federal,  state  and  local  regulations,  including
regulations  promulgated  by  the  Americans  with Disabilities Act (the "ADA")
which  require that remodeled or altered restaurants  be  handicap  accessible.
The Company  is  also  subject  to Federal and state environmental regulations,
although  such regulations have not  had,  and  are  not  expected  to  have, a
material effect on the Company's operations.

   The  Company  is  subject  to the Fair Labor Standards Act and various state
laws governing such matters as  minimum  wage  requirements, overtime and other
working conditions and citizenship requirements.  In September 1997, the second
phase of an increase in the minimum wage was implemented in accordance with the
Federal  Fair  Labor  Standards  Act  of  1996.  A significant  number  of  the
Company's food service personnel are paid at  rates  related  to   the  Federal
minimum  wage  and,  accordingly,  increases in the minimum wage have increased
labor costs at the Company's restaurants.

   The  Company  is  also subject to various  local,  state  and  Federal  laws
regulating the discharge  of  pollutants  into  the  environment.   The Company
believes  that  it  conducts  its  operations  in  substantial  compliance with
applicable environmental laws and regulations.  In an effort to prevent and, if
necessary,   to   correct   environmental   problems,   the   Company  conducts
environmental audits of proposed restaurant sites in order to determine whether
there is any evidence of contamination prior to purchasing or entering  into  a
lease.

   The  Company  believes  that  it  is operating in compliance with applicable
Federal, state and local laws and regulations governing its operations.

COMPETITION

   The quick-service restaurant industry  is highly competitive with respect to
price, service, location and food quality.   In  each  of its markets, Carrols'
restaurants  compete  with a large number of national and  regional  restaurant
chains,  as  well  as  locally-owned   restaurants,   offering  low-priced  and
medium-priced  fare. Convenience stores, grocery store delicatessens  and  food
counters, cafeterias  and  other  purveyors  of  moderately  priced and quickly
prepared  foods  also  compete  with  the  Company.  In the Company's  markets,
McDonald's, Wendy's and Hardee's provide the most significant competition.

   The  Company's  largest  competitor  is  McDonald's. According  to  publicly
available information, as of December 31, 1997, the McDonald's worldwide system
comprised over 23,000 restaurants and total system-wide  revenues  for the year
ended December 31, 1997 were $33.6 billion.   The Company believes that product
quality  and taste, national brand recognition, convenience of location,  speed
of service, menu variety, price and ambiance are the most important competitive
factors in  the  quick-service  restaurant  industry  and  that its Burger King
restaurants effectively compete in each category.

EMPLOYEES

At December 31, 1997, Carrols employed approximately 11,700  persons  of  which
approximately 200 were supervisory and administrative personnel and 11,500 were
restaurant  operating  personnel.   None  of  Carrols' employees are covered by
collective  bargaining  agreements.  Approximately  10,500  of  the  restaurant
operating personnel at December  31,  1997  were  part-time employees.  Carrols
believes that the dedication of its employees is critical  to  its success, and
that its employee relations are good.

ITEM 2.     PROPERTIES

   The Company owns the approximately 20,000 square foot building  at 968 James
Street, Syracuse, New York, which houses its executive offices and all  of  the
Company's  administrative  operations (except for those conducted at five small
regional offices).  In addition  to the above, at December 31, 1997 the Company
owned or leased the following properties:



<TABLE>
<CAPTION>
                                         Owned              Leased             Leased
<S>                               <C>                 <C>                <C>                <C>
                                         Land;               Land;              Land;
                                         Owned               Owned             Leased
                                       BUILDING            BUILDING           BUILDING            TOTAL
Burger King

  restaurants
                                     23                  17               295 (a)              335
Burger King
  restaurants
  under construction                  1                   2                  1                   4
Excess properties:
  Leased to others                   --                  --                  4                   4
  Available for sale
   or lease                           4                  --                  --                  4
Total properties
                                     28                  19                300                 347
</TABLE>

(a)   Includes 22 restaurants located in mall shopping centers.


   Most of the Company's leases are  coterminous  with  the  related  Franchise
Agreements.  The  Company believes that it generally will be able to renew,  at
commercially reasonable  rates,  the  leases  whose  terms  expire prior to the
subject Franchise Agreements.

   Most  leases  require  the  Company,  as  lessee, to pay utility  and  water
charges,  premiums on insurance and real estate  taxes.   Certain  leases  also
require contingent  rentals  based upon a percentage of gross sales that exceed
specified minimums.


ITEM 3.     LEGAL PROCEEDINGS

   The  Company is not a party  to  any  pending  legal  proceeding  which,  in
management's  belief,  will  have  a  material  adverse effect on the Company's
results of operations or financial condition, nor  to  any  other pending legal
proceedings other than ordinary, routine litigation incidental to its business.


<PAGE>
ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                                Not applicable.



                                    PART II


ITEM 5.     MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND RELATED  STOCKHOLDER
            MATTERS

   There  is  no  established trading market for the Company's  capital  stock.
Carrols Holdings Corporation  owns  10  shares  of  common stock of the Company
(representing 100% of the capital stock of the Company).

   Cash  dividends paid during 1996 and 1997 by Carrols  to  Holdings  were  as
follows:


<TABLE>
<CAPTION>
                                 PER SHARE                 TOTAL
<S>                       <C>                     <C>
January 1996           $     800.00         $      8,000
March 1996             $  41,480.00         $    414,800
August 1996            $  20,722.40         $    207,224
October 1996           $  37,000.38         $    370,004
April 1997             $ 184,217.01         $  1,842,170
May 1997               $  37,087.78         $    370,878
July 1997              $  13,610.00         $    136,100
October 1997           $  13,610.00         $    136,100
December 1997          $ 185,309.46         $  1,853,095
</TABLE>


   The Company's  loan  agreements  impose  limitations  on  certain restricted
payments, which include dividends and preferred stock redemptions.  As a result
of the 1997 investments by the MD Investors and senior management,  the Company
has sufficient unrestricted amounts to enable it to make the required  payments
to satisfy preferred stock dividend and redemption requirements.





<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA


DOLLARS IN THOUSANDS EXCEPT RESTAURANT DATA


<TABLE>
<CAPTION>
                                                       1997             1996            1995            1994           1993 (A)
<S>                                              <C>              <C>              <C>             <C>             <C>
SUMMARY OF OPERATING RESULTS:
Restaurant sales
                                                 $295,436         $240,809         $226,257        $203,927        $ 171,137
Costs and expenses:
  Cost of sales                                    85,542           68,031           63,629          57,847           48,502
  Restaurant wages and related expenses            89,447           70,894           65,932          59,934           51,739
  Advertising expense                              13,122           10,798            9,764           8,785            7,930
  Other restaurant operating expenses              61,691           48,683           45,635          42,390           35,192
  Administrative expenses                          13,121           10,387           10,434           9,122            7,534
  Depreciation and amortization                    15,102           11,015           11,263          11,259           12,143
  Unusual (b)                                        -___              509             -___           1,800             -_ _
Total operating costs and expenses                278,025          220,317          206,657         191,137          163,040
Operating income
                                                   17,411           20,492           19,600          12,790            8,097
Interest income from income tax refund
                                                     (983)            -                -               -                -
Interest expense                                   15,581           14,209           14,500          14,456           12,505
Income (loss) before taxes
                                                    2,813            6,283            5,100          (1,666)          (4,408)
Provision for (benefit from) income taxes             655            3,100           (9,826)            165             -___
Net Income Before Extraordinary Loss                2,158            3,183           14,926          (1,831)          (4,408)
Extraordinary Loss on Extinguishment of Debt
                                                     -___             -___             -___            -___           (4,883)
Net Income (Loss)
                                                 $  2,158         $  3,183         $ 14,926        $ (1,831)       $  (9,291)
OTHER FINANCIAL DATA:
EBITDA (c)
                                                 $ 32,513         $ 31,507         $ 30,863        $ 24,049        $  20,240
Total assets
                                                  215,328          138,588          135,064         125,319          119,735
Long-term debt                                    154,649          118,180          116,375         120,680          114,197
Capital lease obligations, long-term                2,060            2,503            3,301           3,966            4,603
Total long-term debt and capital lease
  obligations                                     156,709          120,683          119,676         124,646         118,800
Stockholders' equity (deficit)                     17,447          (11,662)         (12,916)        (27,208)         (22,404)
NUMBER OF BURGER KING RESTAURANTS:
  At end of period                                    335              232              219             219              195
  Annual weighted average                             280              225              219             207              185
</TABLE>



(a) All years included 52 weeks except fiscal 1993 which had 53 weeks.



(b) Includes  $509  in  1996  for  costs  associated  with a change of control;
    includes $1,800 in 1994 for charges related to closing restaurants.



(c) EBITDA  represents  operating  income plus depreciation  and  amortization.
    While EBITDA should not be construed  as  a substitute for operating income
    or  a  better  indicator  of  liquidity  than  cash   flow  from  operating
    activities,  which  are  determined  in accordance with generally  accepted
    accounting  principles, EBITDA is included  herein  to  provide  additional
    information with  respect  to the ability of the Company to meet its future
    debt service, capital expenditure  and  working  capital  requirements.  In
    addition,  management  believes  that  certain  investors and lenders  find
    EBITDA  to be a useful tool for measuring the ability  of  the  Company  to
    service its debt.








<PAGE>
           ITEM 7.      MANAGEMENT'S   DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS

Results of Operations

   The following table sets forth, for the  periods indicated, select operating
results as a percentage of restaurant sales.

<TABLE>
<CAPTION>
                                                     1997             1996             1995
<S>                                            <C>              <C>              <C>
Restaurant sales
                                                 100.0%           100.0%           100.0%
Costs and expenses:
  Cost of sales                                   29.0             28.3             28.1
  Restaurant wages and related
   expenses                                       30.3             29.4             29.1
  Other restaurant expenses
   including advertising                          25.3             24.7             24.5
  Administrative expenses                          4.4              4.5              4.6
  Depreciation and amortization                    5.1              4.6              5.0
Operating income
                                                   5.9%             8.5%             8.7%
EBITDA
                                                  11.0%            13.1%            13.6%
</TABLE>

   RESTAURANT SALES.  Restaurant sales for the  year  ended  December 31, 1997,
increased 22.7% to $295.4 million from $240.8 in 1996.  The increase  in  sales
was primarily the result of the growth in the number of Burger King restaurants
operated  by the Company which increased from 232 at the end of 1996 to 335  at
the end of  1997.  During 1997, the Company opened 11 new restaurants, acquired
93 restaurants  in six transactions, and closed one underperforming restaurant.
Sales at the Company's  214  comparable  restaurants (those units operating for
the entirety of the compared periods) decreased  1.4% during 1997.  In general,
the Company did not increase menu prices during 1997.

   Restaurant sales were $240.8 million and $226.3  million  for 1996 and 1995,
respectively,  and  increased  6.4%  and  10.9% over the year-earlier  periods.
Comparable restaurant sales increased 3.2%  in  1996  and  3.8%  in  1995.  The
average number of restaurants operated by the Company was 280 in 1997, compared
to 225 in 1996 and 219 in 1995.

   OPERATING  COSTS AND EXPENSES.  Cost of sales (food and paper costs),  as  a
percentage of sales,  were 29.0% in 1997 compared to 28.3% in 1996 and 28.1% in
1995.  The increase in  1997,  in  part,  reflected  somewhat higher food costs
including approximately a 2% increase in average beef  prices  from 1996 level.
The  increase  in  1996  was  due  to the effect of higher discount promotional
activity over 1995, offset in part by lower commodity costs.

   Restaurant wages and related expenses  have  increased  as  a  percentage of
sales during the past three years rising from 29.1% in 1995, to 29.4%  in 1996,
and  to  30.3%  in  1997.   Wages have increased over this period due to higher
labor rates including the effect of increases in the Federal minimum wage rates
over the past two years.  The Federal Fair Labor Standards Act of 1996 mandated
an increase from $4.25 per hour  to $4.75 per hour which took effect in October
1996, and a second increase in September 1997 to $5.15 per hour.

   Other restaurant operating expenses were 25.3% of sales in 1997, compared to
24.7% in 1996 and 24.5% in 1995.   In  part, the increase in 1997 is reflective
of  general  inflationary  increases  without   a   corresponding  increase  in
comparable  restaurant  sales.  In addition, the Company  added  a  significant
number of restaurants through  acquisition  during 1997, and therefore, expense
relationships  have  been  somewhat  higher as these  new  units  become  fully
integrated into the business of the Company.
   Administrative  expenses increased approximately  $2.7  million,  and  as  a
percentage of sales,  were  4.4%  in 1997 compared to 4.3% and 4.6% in 1996 and
1995, respectively.  This increase  reflects  the addition of field supervision
and corporate support as a result of the 1997 addition  of over 100 restaurants
and to support the Company's plans for continued expansion.

   EBITDA.   Earnings  before  interest, taxes, depreciation  and  amortization
("EBITDA") increased from $31.5 million in 1996 to $32.5 million in 1997.  As a
percentage of sales, EBITDA decreased  from 13.1% in 1996 to 11.0% in 1997 as a
result of the factors discussed above.  EBITDA was $30.9 million in 1995.

   DEPRECIATION  AND AMORTIZATION.  Depreciation  and  amortization  was  $15.1
million in 1997, $11.0  million in 1996 and $11.3 million in 1995.  These costs
increased $4.1 million in  1997  which  was  due  primarily  to the increase in
goodwill  and  purchased  intangibles  resulting  from the purchase  method  of
accounting for newly acquired restaurants.

   INTEREST EXPENSE.  Interest expense was $15.6 million  in  1997  compared to
$14.2  million and $14.5 million in 1996 and 1995, respectively.  The  increase
in 1997  was  the  result  of higher average debt balances brought about by the
funding of the restaurants that were acquired during the year.

   INCOME TAXES.  The provision  for  income taxes of $655,000 in 1997 resulted
in an effective income tax rate of 23.2%.  The low effective rate was primarily
attributable to the favorable settlement of a Federal income tax claim that the
Company has had outstanding for several  years.  As a result of the settlement,
the Company's tax provision was reduced by  $806,000  and  the Company recorded
interest income of $983,000.  The higher than anticipated effective tax rate in
1996 was principally the result of the $.5 million of costs  associated  with a
change  of  control  of  the  Company which are not deductible.  The income tax
benefit reflected in 1995 resulted  from  the reversal of a valuation allowance
for the net deferred income tax asset associated  with  the  Company's tax loss
carryforwards.   This was based on a review of expected future  earnings  which
concluded that it was more likely than not that the Company would fully realize
the benefits of the net operating loss carryforwards.


LIQUIDITY AND CAPITAL RESOURCES

   The Company does  not have significant receivables or inventory and receives
trade credit based upon  negotiated terms in purchasing food products and other
supplies.  The Company is  able  to  operate with a substantial working capital
deficit because (i) restaurant operations  are  conducted on a cash basis, (ii)
rapid turnover allows a limited investment in inventories,  and (iii) cash from
sales  is  usually  received  before  related  accounts for food, supplies  and
payroll become due.  The Company's cash requirements  arise  primarily from the
need  to  finance  the  opening and equipping of new restaurants,  for  ongoing
capital  reinvestment in its  existing  restaurants,  for  the  acquisition  of
existing Burger King restaurants, and for debt service.

   The Company's 1997 operations generated approximately $19.9 million in cash,
compared to $14.3 million during 1996 and $16.7 million in 1995.

   Capital  expenditures  represent a major investment of cash for the Company,
and totaled $96.7 million, $23.2 million and $8.5 million, 1997, 1996 and 1995,
respectively.  The 1997 capital  expenditures  included  $78.5  million for the
acquisition of 93 existing Burger King restaurants (including real estate for 3
of  the restaurants), as well as $9.7 million for the construction  of  15  new
restaurants.   The  balance  of  the  1997  capital  expenditures  went  toward
restaurant  capital  maintenance  and  remodeling.   During  1997,  the Company
completed  23 remodels in conjunction with the renewal of franchises that  were
scheduled to  expire  between  1997 and 1999.  During the past three years, the
Company has completed 68 remodels.

   In 1998, the Company anticipates  capital  expenditures of approximately $35
million not including the cost of any acquisitions  that  the Company may make.
These amounts include approximately $15 million for construction  of  new units
(including  certain  real  estate) and $8 million for ongoing reinvestment  and
remodeling of its existing restaurants.   The  Company's  1998 reinvestment and
remodeling spending is anticipated to be somewhat higher than historical levels
as  the  Company invests in the 1997 acquired units to bring  them  up  to  the
Company's  operating standards.  In 1998, the Company also plans to upgrade its
restaurant point-of-sale  and  in-restaurant  support  systems,  and  has  also
undertaken  an  upgrade  of  its  headquarters information and decision support
systems.  The total cost of these systems projects is estimated to be $11 to 12
million over the next 12 to 18 months.

   On March 27,1997, Madison Dearborn Capital Partners acquired 283,334 shares,
and  senior  management  acquired 10,810  shares,  of  Carrols  Holdings  which
resulted in the Company receiving  net  proceeds  of $30.4 million.  On May 12,
1997  the Company also entered into a new credit agreement  which established a
$25  million Revolving Loan Facility and a $127 million Advance  Loan  Facility
which  is available to fund the cost of acquisitions.  During 1997, the Company
used the  net  proceeds  from the sale of stock along with borrowings under its
credit facility to fund the  acquisition of 93 Burger King restaurants totaling
$79.6 million.

   The  sale  and  leaseback  of 15  restaurant  properties  in  December  1997
generated $13 million, the proceeds  of which were used to reduce amounts which
had been borrowed under the Company's  credit  agreement.  In 1997, the Company
also  paid  dividends  to Holdings totaling $4.3 million  for  the  payment  by
Holdings of dividends on  its  preferred  stock  and for the redemption of $3.6
million of the preferred stock.  The balance of Holdings'  preferred  stock  is
scheduled  for  mandatory  redemption with payments of $1.8 million in December
1998 and December 1999.

   At December 31, 1997, the  Company  had  $21.5  million  available under its
Revolving  Loan  facility after reserving $1.0 million for a letter  of  credit
guaranteed by the  facility, and $64.3 million available under its Advance Loan
Facility.  While interest  is  accrued  monthly, payments of approximately $6.2
million  for  interest  on the Company's 11.50%  Senior  Notes  are  made  each
February 15th and August  15th  thus  creating  semi-annual  cash  needs.   The
Company  believes  that  its  operations  and  capital  resources  will provide
sufficient   cash   availability   to   cover   its  working  capital,  capital
expenditures,  planned  development  and  debt  service  requirements  for  the
foreseeable future.

   The  Company's  loan  agreements impose limitations  on  certain  restricted
payments, which include dividends and preferred stock redemptions.  As a result
of the 1997 investments by  Madison Dearborn and senior management, the Company
has sufficient unrestricted amounts  to enable it to make the required payments
to satisfy preferred stock dividend and redemption requirements.






<PAGE>
INFLATION

   The  inflationary factors which have  historically  affected  the  Company's
results of  operations  include  increases  in  food and paper costs, labor and
other  operating  expenses.   Wages  paid  in the Company'  s  restaurants  are
impacted  by  changes  in  the  Federal  or state  minimum  hourly  wage  rate.
Accordingly, changes in the Federal or states minimum hourly wage rate directly
affect  the Company's labor cost.   The Company  and  the  restaurant  industry
typically  attempt to offset the effect of inflation, at least in part, through
periodic menu price increases and various cost reduction programs.  However, no
assurance  can  be  given  that  the  Company  will  be  able  to  offset  such
inflationary cost increases in the future.

YEAR 2000

   The Company  recognizes  the  need  to  ensure  its  operations  will not be
adversely  impacted  by Year 2000 software failures.  The Company is addressing
this risk to the availability  and  integrity  of  financial  systems  and  the
reliability  of  operational  systems.   As  discussed  above,  the Company has
projects  underway  for  the installation of new point-of-sale systems  in  its
restaurants and for the replacement  of  a substantial portion of its corporate
financial and decision support systems.

   The primary purpose of these projects is  designed to improve the efficiency
of the Company's restaurant and support operations,  however,  they  will  also
provide  the additional benefit of making its systems Year 2000 compliant.  The
Company  is   installing  commercially  available  point-of-sale  hardware  and
software, and has  purchased a suite of financial software applications, all of
which are designed and warranted to be Year 2000 compliant.

ITEM 7A.    QUANTITATIVE AND QUALTITATIVE DISCLOSURES ABOUT MARKET RISKS

            Not applicable.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   The Index to Financial Statements attached hereto is set forth in Item 14.


ITEM 9.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

   On August 12, 1997 the registrant dismissed  the  accounting  firm of Arthur
Andersen  LLP ("Arthur Andersen") as their principal audit accountant  and  has
engaged the  services  of  PricewaterhouseCoopers,  L.L.P  as  their  principal
accountants.

   Arthur  Andersen were the principal audit accountants during the year  ended
December 31,  1996  and their report on the financial statements for the period
ended December 31, 1996  did  not  contain  an adverse opinion or disclaimer of
opinion  nor were financial statement opinions  qualified  or  modified  as  to
uncertainty, as to audit scope or as to accounting principles.

   There have  been no disagreements on any matters of accounting principles or
practices, financial  statement  disclosure or auditing scope of procedure with
the  accounting  firm of Arthur Andersen  for  the  most  recent  year  or  any
subsequent interim period.






<PAGE>
                                   PART III


ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

      The Company's Directors and executive officers are:

<TABLE>
<CAPTION>

NAME                                         AGE          POSITION WITH THE COMPANY
<S>                                 <C>                   <C>
Alan Vituli
                                             56           Chairman of the Board and Chief Executive Officer
Daniel T. Accordino                          47           President, Chief Operating Officer and Director
Paul R. Flanders                             41           Vice President-Finance and Treasurer
Timothy J. LaLonde                           41           Vice President-Controller
Richard H. Liem                              44           Vice President-Financial Operations
Joseph A. Zirkman                            37           Vice President, General Counsel and Secretary
Steven Barnes                                49           Vice President-Regional Director
Michael A. Biviano                           41           Vice President-Regional Director
Joseph W. Hoffman                            35           Regional Director
David R. Smith                               48           Vice President-Regional Director
James E. Tunnessen                           43           Vice President-Regional Director
Richard L. Verity                            41           Vice President-Regional Director
Benjamin D. Chereskin                        39           Director
James M. Conlon                              30           Director
David J. Mathies, Jr.                        50           Director
C. Ronald Petty                              52           Director
Robin P. Selati                              32           Director
Clayton E. Wilhite                           52           Director
</TABLE>
Certain  biographical information regarding each current Director and executive
officer of the Company is set forth below:

   Mr. Vituli  has  been  Chairman of the Board of Carrols since 1986 and Chief
Executive Officer since March  1992.  He is also a director and Chairman of the
Board of Holdings.  Between 1983 and 1985,  Mr.  Vituli  was  employed by Smith
Barney,  Harris  Upham  & Co., Inc. as a senior vice president responsible  for
real estate  transactions.   From  1966  until joining Smith Barney, Mr. Vituli
was associated with the accounting firm of  Coopers  &  Lybrand,  first  as  an
employee  and  the last ten years as a partner. Among the positions held by Mr.
Vituli at Coopers  & Lybrand was national director of mergers and acquisitions.
Prior to joining Coopers  &  Lybrand, Mr. Vituli was employed in a family owned
restaurant business.  Mr. Vituli  also  serves  as  a  Director on the Board of
Directors of Pollo Tropical, Inc.

   Mr. Accordino has been President, Chief Operating Officer  and a Director of
Carrols  since  February  1993.   Prior  thereto,  he served as Executive  Vice
President-Operations of Carrols from December 1986 and as Senior Vice President
from April 1984.  From 1979 to April 1984 he was Vice President responsible for
restaurant operations of the Company, having previously served as the Company's
Assistant Director of Restaurant Operations.  Mr. Accordino  has  been employed
by the Company since 1973.

   Mr. Flanders has been Vice President-Finance and Treasurer since April 1997.
Prior  to joining Carrols he was Vice President-Corporate Controller  of  Fay's
Incorporated  from  1989  to  1997,  and Vice President-Controller for Computer
Consoles, Inc. from 1982 to 1989.  Mr.  Flanders  was  also associated with the
accounting firm of Touche Ross & Co. from 1977 to 1982.

   Mr. LaLonde has been Vice President-Controller since  July  1997.   Prior to
joining  Carrols  he  was a Controller at Fay's Incorporated from 1992 to 1997.
Prior to that he was a  Senior  Audit  Manager  with  the  accounting  firm  of
Deloitte & Touche LLP having been associated with that firm beginning in 1978.

   Mr.  Liem became Vice President-Financial Operations in May 1994.  Prior  to
joining Carrols Mr. Liem was a Senior Audit Manager with the accounting firm of
Price Waterhouse.  Mr. Liem was with Price Waterhouse beginning in 1983.

   Mr. Zirkman  became Vice President and General Counsel of Carrols in January
1993.  He was appointed  Secretary  of  the  Company in February 1993. Prior to
joining Carrols, Mr. Zirkman was an associate  with  the New York City law firm
of Baer Marks & Upham beginning in 1986.

   Mr. Barnes is Vice President-Regional Director of Carrols.   He  has  been a
Vice  President since February 1997 and a Regional Director of Operations since
1993.   Prior  to  joining Carrols, Mr. Barnes was Vice President-Operations of
Snapps Restaurants, Inc. from 1989 to 1993.

   Mr. Biviano is Vice  President-Regional  Director  of  Carrols.  He has been
Regional Director of Operations since October 1989, having  served  as District
Supervisor  from December 1983 to October 1989.  Mr. Biviano has been  employed
by the Company since 1973.

   Mr. Hoffman  has  been  Regional  Director  of Carrols since July 1997.  Mr.
Hoffman joined the Company in 1993 in connection  with  one  of  the  Company's
acquisitions  and  served  in the capacity of District Supervisor from 1993  to
1997.  Prior to 1993 he was  in a similar capacity with Community Food Service,
Inc.

   Mr. Smith is Vice President-Regional  Director  of  Carrols.   He  has  been
Regional   Director  of  Operations  since  1984,  having  served  as  District
Supervisor from  1975 to 1984. Mr. Smith has been employed by the Company since
1972.

   Mr. Tunnessen is  Vice  President-Regional Director of Carrols.  He has been
Regional Director of Operations  since  August  1988, having served as District
Supervisor from 1979 to August 1988.  Mr. Tunnessen  has  been  employed by the
Company since 1972.

   Mr. Verity has been Vice President-Regional Director since August  1997 when
he joined the Company in conjunction with the Company's acquisition of  a group
of 63 restaurants.  Mr. Verity was previously with Resser Management Corp. from
1986 to 1997 and held the position of Executive Vice President.

   Mr. Chereskin has served as a Director since March 1997.  He has been a Vice
President  of  Madison Dearborn Capital Partners since co-founding the firm  in
1993.  Prior to  that  Mr. Chereskin was with First Chicago Venture Capital for
nine years.  Mr. Chereskin also serves on the Board of Directors of Beverages &
More,  Inc.,  The  Cornerstone   Investments   Group,   Inc.,  Tuesday  Morning
Corporation and National Wholesale Liquidators, Inc.

   Mr. Conlon has served as a Director since February 1998.  Since 1992, he has
held  the  position  of  Managing  Director-Merchant Banking,  USA  for  Dilmun
Investments, Inc.  From 1989 to 1992  Mr.  Conlon  was a securities analyst for
TIAA-CREF.

   Mr.  Mathies  has served as a Director of Carrols since  April  1996.  Since
1988, Mr. Mathies  has been President of Dilmun Investments, Inc.  From 1971 to
1988, he was employed  by  Mellon  Bank,  where  he  was  Head of their Pension
Management  Group, providing investment management services  to  middle  market
clients.

   Mr. Petty  has  served  as a Director of Carrols since July 1997.  Mr. Petty
has been the Chairman, Chief Executive and President of Peter Piper, Inc. since
November 1996.  Prior to joining  Peter Piper, Mr. Petty was the Executive Vice
President of Flagstar Companies, Inc. and President and Chief Executive Officer
of Denny's.  Before that he served  as  President  and Chief Executive of Miami
Subs  Corporation  and  held  a variety of senior positions  with  Burger  King
Corporation including President  and  Chief  Operating  Officer of its U.S. and
International division.

   Mr. Selati has served as a Director since March 1997.   Since  1993,  he has
been  associated with Madison Dearborn Capital Partners.  Prior to 1993 he  was
associated   with  Alex  Brown  &  Sons  Incorporated  in  the  consumer/retail
investment banking group.  Mr. Selati also serves as a Director on the Board of
Directors of Peter  Piper,  Inc.,  Tuesday  Morning  Corporation,  and National
Wholesale Liquidators, Inc.

   Mr.  Wilhite  has served as a Director since July 1997.  Since 1996  he  has
been the Chairman  of  Thurloe  Holdings,  L.L.C..   Prior  to 1996 he was with
D'Arcy Masius Benton & Bowles, Inc. (DMB&B) having served as  its Vice Chairman
from 1995 to 1996, President of DMB&B/North America from 1988 to  1995,  and as
Chairman  and  Managing  Director  of  DMB&B/St.  Louis from 1985 to 1988.  Mr.
Wilhite also serves as a Director on the Board of Directors  of Pollo Tropical,
Inc.

   All Directors hold office until the next annual meeting of  stockholders  or
until  their successors have been elected and qualified. The executive officers
of the Company  are  chosen  by  the  Board  and  serve at its discretion.  All
Directors of Carrols Corporation also serve as Directors  for  Carrols Holdings
Corporation.





<PAGE>
ITEM 11.    EXECUTIVE COMPENSATION

   The  following  tables  set  forth certain information for the fiscal  years
ended December 31, 1997, 1996 and  1995 for the Chief Executive Officer and the
next four most highly compensated executive  officers  of  the Company who were
serving   as  executive  officers  at  December  31,  1997  and  whose   annual
compensation  exceeded  $100,000.   No  other executive officers received total
compensation in excess of $100,000 in 1997.   Stock  option  data refers to the
stock options of Carrols Holdings Corporation.

   SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                                    LONG-TERM
                                                                                               COMPENSATION
                                                                   Annual Compensation          Securities
                                                                                          (a)      Underlying
<S>                                     <C>            <C>                <C>                 <C>
NAME AND PRINCIPAL POSITION                  YEAR            SALARY              BONUS             OPTIONS.(#)
Alan Vituli                                  1997      $392,758           $      -               72,830
  Chairman of the Board and                  1996       363,160            128,210                    -
  Chief Executive Officer                    1995       352,632            245,000               20,000
Daniel T. Accordino                          1997       288,386                  -               31,479
  President, Chief Operating                 1996       258,943             91,778                    -
  Officer and Director                       1995       250,751            150,322               10,000
Joseph A. Zirkman                            1997       120,436                  -                1,118
  Vice President, General                    1996       115,288             40,934                    -
  Counsel and Secretary                      1995       105,249             41,995                3,000
Paul R. Flanders                             1997       105,925                  -                1,500
  Vice-President, Finance                    1996             -                  -                    -
  and Treasurer                              1995             -                  -                    -
Richard H. Liem                              1997       103,160                  -                  500
  Vice President,                            1996        94,750             30,288                    -
  Financial Operations                       1995        93,092             37,153                3,000
</TABLE>



(d)  The Company provides bonus compensation to Executive Officers  based on an
   individual's  achievement  of certain specified objectives and the Company's
   achievement of specified increases in shareholder value.





<PAGE>
   OPTION GRANTS IN LAST FISCAL YEAR


<TABLE>
<CAPTION>
                                                                                                       (c)
                              Number of   of Total Options
                             Securities      Granted to                                   Potential Realizable Value at
                             Underlying       Employees       Exercise                       Assumed Rates of Stock
                               Options                        Price per     Expiration    APPRECIATION FOR OPTION TERM
NAME                              GRANTED         IN 1997          SHARE          DATE              5%                  10%
<S>                           <C>             <C>             <C>            <C>             <C>               <C>
Alan Vituli (a)
                                72,830          61.1%         $101.76           3/26/2007     $5,429,590         $13,035,600
Daniel T. Accordino (a)         31,479          26.4%          101.76           3/26/2007      2,346,808           5,634,322
Joseph A. Zirkman   (a)            368            .3%          101.76           3/26/2007         27,435              65,867
                          (b)      750            .6%          110.00           6/9/2007          51,884             131,484
Paul R. Flanders (b)
                                 1,500           1.3%          110.00           6/9/2007         103,768             262,968
Richard H. Liem (b)                500            .4%          110.00           6/9/2007          34,589              87,656
</TABLE>



(e) Stock option grants to Messrs. Vituli, Accordino and Zirkman
   include 29,480, 2,579 and 368  shares,  respectively, granted
   at  the time of the MD Investment under the  Vituli  Non-Plan
   Option Agreement, the Accordino Non-Plan Option Agreement and
   the Zirkman  Non-Plan Option Agreement, respectively.  At the
   time of the MD Investment, stock option grants under the 1996
   Long-Term Incentive  Plan were also made for 43,350 shares to
   the Vituli Family Trust  in  exchange for options that it was
   holding.  Mr. Accordino was also  granted  options for 28,900
   shares under the 1996 Long-Term Incentive Plan.  These plans,
   as  well  as  the  terms  of  the aforementioned grants,  are
   described in detail separately in this report.

(f) Stock option grants to Messrs.  Zirkman,  Flanders and Liem include
   750,  1,500, and 500 shares, respectively, granted  under  the  1996
   Long-Term  Incentive  Plan.  These options become exercisable at the
   rate of 25% per year beginning on December 31, 1997.

(g) Potential realizable value is based on an assumption that the price
   of  Holdings'  common shares  appreciate  at  5%  and  10%  annually
   (compounded) from  the  date  of grant until the end of the ten year
   option  term.   These  calculations   are   based   on  requirements
   promulgated by the Securities and Exchange Commission  and  are  not
   intended  to  forecast  possible  future  appreciation  of the stock
   price.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

   During  the  last  fiscal  year,  no executive officer of the
Company  served  as a director of or member  of  a  compensation
committee of any entity  for which any of the persons serving on
the Board of Directors of  the  Company  or  on the Compensation
Committee   of   the   Board  of  Directors  (the  "Compensation
Committee") is an executive officer.  The Compensation Committee
is comprised of Messrs. Chereskin, Mathies and Wilhite.

BOARD OF DIRECTORS

   DIRECTORS COMPENSATION.   Directors who are Company employees
do  not  receive  any additional  compensation  for  serving  as
directors.  Directors  who  are  not  employees  of  the Company
receive   a  fee  of  $15,000  per  annum.   All  Directors  are
reimbursed  for  all  reasonable  expenses  incurred  by them in
acting  as  Directors, including as members of any committee  of
the Board of Directors.

   LIABILITY   LIMITATION.   As  permitted  under  the  Delaware
General Corporation  Law,  the Company's Restated Certificate of
Incorporation provides that  a  Director of the Company will not
be  personally liable to the Company  or  its  stockholders  for
monetary  damages  for  breach  of  a fiduciary duty owed to the
Company or its stockholders. By its terms and in accordance with
the laws of the State of Delaware, however,  this provision does
not  eliminate  or  limit  the  liability of a Director  of  the
Company (i) for any breach of the  Director's duty of loyalty to
the Company or  its stockholders, (ii)  for  an  act or omission
committed in bad faith or involving intentional misconduct  or a
knowing  violation  of law, (iii) for any transaction from which
the Director derived an improper personal benefit or (iv) for an
improper declaration  of  dividends or purchase of the Company's
securities.

   INDEMNIFICATION.   The  Company's   Restated  Certificate  of
Incorporation  provides  that the Company  shall  indemnify  its
Directors  and  officers to  the  fullest  extent  permitted  by
Delaware law.


DESCRIPTION OF PLANS

   EMPLOYEE SAVINGS  PLAN.   The  Company  offers  its  salaried
employees  the  option to participate in the Carrols Corporation
Corporate Employee  Savings  Plan  (the "Savings Plan") which is
qualified as a profit-sharing plan.    In  accordance  with  the
Savings  Plan,  Carrols  matches  up  to $1,060 of an employee's
contributions by contributing $0.50 for  each dollar contributed
by  the  employee.   Employees  are fully vested  in  their  own
contributions; employees become vested in Carrols' contributions
beginning in the fourth year of service,  and  are  fully vested
after seven years of service or upon retirement at age  65  with
five  years'  service,  death,  permanent  or  total disability.
Benefits  may  be  paid out upon the occurrence of  any  of  the
foregoing  events  in  a  single  cash  lump  sum,  in  periodic
installments over not  more  than  15 years or in the form of an
annuity. The employee's contributions  may  be  withdrawn at any
time, subject to restrictions on future contributions.  Carrols'
matching contributions may be withdrawn under certain conditions
of  financial  necessity  or  hardship as defined in the Savings
Plan.

   BONUS PLANS. Carrols has cash bonus plans designed to promote
and reward excellent performance  by  providing  employees  with
incentive compensation. Key senior management executives of each
operating  division can be eligible for bonuses equal to varying
percentages  of  their  respective annual salaries determined by
the performance of the Company and the division.

   1996 LONG-TERM INCENTIVE  PLAN.   In  connection  with the MD
Closing, Holdings adopted the Carrols Holdings Corporation  1996
Long-Term Incentive Plan (the "1996 Plan") pursuant to which the
Company  may  grant  "Incentive Stock Options" (as defined under
Section 422 of the Internal  Revenue  Code),  nonqualified stock
options,   stock   appreciation   rights,   restricted    stock,
performance  shares  and performance units and other stock-based
awards (the foregoing collectively "Awards") to certain officers
and employees of the Company  and  its  subsidiaries.   The 1996
Plan replaced a prior long-term incentive plan which was adopted
December  26, 1996 (the "Prior Incentive Plan").  The 1996  Plan
is designed to advance the interests of Holdings and the Company
by providing  an  additional  incentive  to  attract  and retain
qualified  and  competent  persons through the encouragement  of
stock ownership or stock appreciation rights in Holdings.

   The 1996 Plan permits the Company's Compensation Committee to
grant, from time to time, options to purchase an aggregate of up
to 106,250 shares of Common  Stock.   The  vesting  periods  for
awards  and  the  expiration  dates for exercisability of Awards
granted under the 1996 Plan are  determined  by the Compensation
Committee;  however, the exercise period for an  option  granted
under the 1996  Plan  may  not exceed ten years from the date of
the grant.  The Compensation  Committee  is  authorized to grant
options  under  the 1996 Plan to all eligible employees  of  the
Company and its subsidiaries,  including  executive officers and
directors  (other  than  outside Directors and  members  of  the
Compensation Committee).

   The option exercise price  per  share  of  any option granted
under the 1996 Plan is determined by the Compensation Committee;
however,  in no event shall the option price per  share  of  any
option intended  to qualify as an Incentive Stock Option be less
than the fair market  value of the Common Stock on the date such
option is granted.  Payment  of such option exercise price shall
be made (i) in cash, (ii) by delivering  shares  of Common Stock
already owned by the holder of such options, (iii) by delivering
a promissory note payable over a three year period  and  bearing
interest  at  the  rate  provided  under  Section 1274(d) of the
Internal Revenue Code of 1986, as amended from  time  to time or
(iv)  by  a  combination  of any of the foregoing, in accordance
with the terms of the 1996  Plan,  the  applicable  stock option
agreement  and  any  applicable  guidelines  of the Compensation
Committee in effect at the time.

   Pursuant  to  the  1996  Plan, in the event of  a  Change  of
Control (as defined in the 1996  Plan), any or all Stock Options
(as defined in the 1996 Plan) and  Stock Appreciation Rights (as
defined   in   the   1996   Plan)   still   outstanding   shall,
notwithstanding  any contrary terms of the Award  Agreement  (as
defined in the 1996  Plan), accelerate and become exercisable in
full at least ten days  prior  to  (and  shall  expire  on)  the
consummation  of  such  Change of Control, on such conditions as
the Compensation Committee shall determine, unless the successor
corporation  assumes  the outstanding  Stock  Options  or  Stock
Appreciation  Rights  or  substitutes  substantially  equivalent
options.

   Pursuant to the 1996 Plan, in the event that the holder of an
option issued pursuant  to  the  1996  Plan  elects  to  pay the
exercise  price  of such option by delivering a promissory note,
such promissory note  may  be  either  (i)  unsecured  and fully
recourse  against  the holder of such option or (ii) nonrecourse
but secured by the shares  of  Common  Stock  being purchased by
such  exercise  and by other assets having a fair  market  value
equal to not less  than  forty  percent of the exercise price of
such option and, in either event,  such note shall mature on the
fifth anniversary of the date thereof.

   In addition, pursuant to the 1996  Plan,  in  the  event of a
Change of Control (as defined in the 1996 Plan) during  the term
of employment with Carrols of a holder of an option issued under
the 1996 Plan, the portion of any such option that is not vested
shall  vest  and become exercisable in full on the date of  such
Change of Control.   In  addition, as soon as practicable but in
no event later than thirty  days  prior  to  the occurrence of a
Change of Control, the Compensation Committee  shall  notify any
holder  of an option granted under the 1996 Plan of such  Change
of Control.  Further, upon a Change of Control that qualifies as
an Approved  Sale  (as  defined  in  the 1996 Plan) in which the
outstanding  Common  Stock  is converted  or  exchanged  for  or
becomes  a right to receive any  cash,  property  or  securities
other than Illiquid Consideration (as defined in the 1996 Plan),
(i)  each option  granted  under  the  1996  Plan  shall  become
exercisable  solely  for  the  amount  of such cash, property or
securities  that  the  holder  of such option  would  have  been
entitled to had such option been  exercised immediately prior to
such event (ii) the holder of such  option  shall  be  given  an
opportunity  to  either  (A)  exercise  such option prior to the
consummation of the Approved Sale and participate  in  such sale
as  a  holder  of  Common Stock or (B) upon consummation of  the
Approved Sale, receive in exchange for such option consideration
equal to the amount  determined  by  multiplying  (1)  the  same
amount  of  consideration  per share of Common Stock received by
the holders of Common Stock in connection with the Approved Sale
less the exercise price per share of Common Stock of such option
to acquire Common Stock by (2)  the  number  of shares of Common
Stock represented by such option; and (iii) to  the  extent such
option  is  not  exercised  prior  to or simultaneous with  such
Approved Sale, any such option shall be canceled.






<PAGE>
DESCRIPTION OF EMPLOYMENT AGREEMENTS

   Vituli Employment Agreement.  On March 27, 1997 in connection
with the MD Closing, the Company entered  into  a Second Amended
and   Restated  Employment  Agreement  (the  "Vituli  Employment
Agreement")  with  Alan  Vituli, which amended and restated that
certain Amended and Restated Employment Agreement dated April 3,
1996 between the Company and Mr. Vituli.  Pursuant to the Vituli
Employment Agreement, Mr.  Vituli  will  continue  to  serve  as
Chairman  of  the  Board  and  Chief  Executive  Officer  of the
Company.   The  Vituli  Employment  Agreement  shall  be  for an
initial  term  of  four  years, commencing on March 27, 1997 and
will be subject to automatic  renewals  for  successive one-year
terms  unless  either the Company or Mr. Vituli  elects  not  to
renew by giving  written  notice  to  the other at least 90 days
before  a  scheduled expiration date.  Pursuant  to  the  Vituli
Employment Agreement,  Mr.  Vituli will receive a base salary of
$400,000 for the first year of  the term, which amount increases
annually  by at least $25,000 subject  to  additional  increases
that may be  authorized by the Compensation Committee.  Pursuant
to the Vituli  Employment Agreement, Mr. Vituli will participate
in the Executive  Bonus Plan of the Company and any stock option
plan of the Company  applicable  to  executive  employees.   The
Vituli  Employment  Agreement also will require that the Company
is responsible for maintaining  the premium payments on a split-
dollar life insurance policy on the life of Mr. Vituli providing
a death benefit of $1.5 million payable  to an irrevocable trust
designated by Mr. Vituli.

   ACCORDINO  EMPLOYMENT  AGREEMENT.    On  March  27,  1997  in
connection  with  the  MD  Closing, the Company entered  into  a
Second Amended and Restated Employment Agreement (the "Accordino
Employment Agreement") with  Daniel  T. Accordino, which amended
and  restated  that  certain  Amended  and  Restated  Employment
Agreement  dated  April  3,  1996 between the  Company  and  Mr.
Accordino.  Pursuant to the Accordino  Employment Agreement, Mr.
Accordino  will  continue  to  serve  as  President   and  Chief
Operating  Officer  of  the  company.   The Accordino Employment
Agreement shall be for an initial term of four years, commencing
on March 27, 1997 and will be subject to  automatic  renewal for
successive  one-year  terms  unless  either  the Company or  Mr.
Accordino elects not to renew by giving written  notice  to  the
other  at  least  90  days  before  a scheduled expiration date.
Pursuant to the Accordino Employment  Agreement,  Mr.  Accordino
will receive a base salary of $300,000 for the first year of the
term,  which  amount  increases  annually  by  at  least $20,000
subject  to additional increases that may be authorized  by  the
Compensation  Committee.   Pursuant  to the Accordino Employment
Agreement, Mr. Accordino will participate in the Executive Bonus
Plan of the Company and any stock option  plan  of  the  Company
applicable  to  executive  employees.   The Accordino Employment
Agreement also will require that the Company  is responsible for
maintaining   the  premium  payments  on  a  split-dollar   life
insurance policy  on the life of Mr. Accordino providing a death
benefit of $1 million payable to an irrevocable trust designated
by Mr. Accordino.

OPTION AGREEMENTS PURSUANT TO HOLDINGS STOCK OPTION PLANS

   VITULI PLAN OPTION  AGREEMENT.  On  December 30, 1996 (during
the  Company's  1997  fiscal  year), pursuant  to  the  Atlantic
Transaction, Holdings granted to  Alan  Vituli,  under  the 1996
Plan, an option (the "Vituli Option") to purchase 43,350  shares
of   Common  Stock.   The  Vituli  Option  (i)  was  immediately
exercisable  with  regard to 15,300 shares of Common Stock at an
exercise price of $110.00  per  share  and  (ii)  was  to become
exercisable on June 1, 1997 with regard to (a) 15,300 shares  of
Common  Stock  at  an  exercise  price  of $130.00 per share and
(b)  12,750  shares  of  Common  Stock at an exercise  price  of
$140.00 per share.  On January 22,  1997, Mr. Vituli contributed
these options to the Vituli Family Trust  for the benefit of his
children.

   In connection with the MD Closing, Holdings granted an option
to purchase 43,350 shares of Common Stock under the 1996 Plan in
exchange for the options held by the Vituli  Family  Trust  (the
"New  Vituli  Plan  Option").  The Vituli Family Trust agreed to
reduce the exercise price  to  $101.7646  per  share.   The  New
Vituli  Plan  Option shall (i) have a term of ten years from the
date of grant,  shall  (ii)  become  exercisable  on the date of
grant  with  regard  to  15,300  shares  of  Common  Stock   and
(iii)  shall  become  exercisable  (a) on December 31, 1997 with
regard to 5,610 shares of Common Stock, (b) on December 31, 1998
with regard to 5,610 shares of Common Stock, (c) on December 31,
1999 with regard to 5,610 shares of  Common  Stock  and  (d)  on
December 31, 2000 with regard to 11,220 shares of Common Stock.

   ACCORDINO PLAN OPTION AGREEMENT. On December 30, 1996 (during
the  Company's  1997  fiscal  year),  pursuant  to  the Atlantic
Transaction, Holdings granted to Daniel T. Accordino,  under the
1996 Plan, an option (the "Accordino Option") to purchase 28,900
shares   of   Common   Stock.   The  Accordino  Option  (i)  was
immediately exercisable  with  regard to 10,200 shares of Common
Stock at an exercise price of $110.00  per share and (ii) was to
becomes  exercisable  on  December  31,  1997   with  regard  to
(a)  10,200  shares  of  Common  Stock at an exercise  price  of
$130.00 per share and (b) 8,500 shares  of  Common  Stock  at an
exercise price of $140.00 per share.

   In  connection  with the MD Closing, the Accordino Option was
canceled and Holdings  granted  to Mr. Accordino, under the 1996
Plan, an option (the "New Accordino  Plan  Option")  to purchase
28,900 shares of Common Stock at an exercise price of  $101.7646
per share.  The New Accordino Plan Option shall (i) have  a term
of  ten  years  from  the  date  of  grant and shall (ii) become
exercisable on the date of grant with regard to 10,200 shares of
Common Stock and (iii) become exercisable  (a)  on  December 31,
1997  with  regard  to  3,740  shares  of  Common Stock, (b)  on
December 31, 1998 with regard to 3,740 shares  of  Common Stock,
(c) on December 31, 1999 with regard to 3,740 shares  of  Common
Stock  and  (d) on December 31, 2000 with regard to 7,480 shares
of Common Stock.

OTHER OPTION AGREEMENTS

   VITULI NON-PLAN  OPTION AGREEMENT.  In connection with the MD
Closing, Holdings granted  to  Mr.  Vituli  a nonqualified stock
option (the "Vituli Non-Plan Option") to purchase  29,480 shares
of Common Stock at an exercise price of $101.7646.   The  Vituli
Non-Plan Option shall have a term of ten years from the date  of
grant  and  shall  become exercisable in five equal parts on the
five consecutive anniversaries of the date of grant.  The Vituli
Non-Plan  Option will  have  substantially  the  same  terms  as
options issued  under  the  1996  Plan  with  respect to (i) the
method of payment of the exercise price of the  Vituli  Non-Plan
Option and (ii) the effect of a Change in Control (as defined in
the New 1996 Plan) on the Vituli Non-Plan Option.

   ACCORDINO NON-PLAN OPTION AGREEMENT.  In connection with  the
MD  Closing,  Holdings  granted  to Mr. Accordino a nonqualified
stock option (the "Accordino Non-Plan Option") to purchase 2,579
shares of Common Stock at an exercise  price  of $101.7646.  The
Accordino Non-Plan Option shall have a term of  ten  years  from
the  date  of  grant  and shall become exercisable in five equal
parts  on the five consecutive  anniversaries  of  the  date  of
grant.   The  Accordino  Non-Plan Option will have substantially
the same terms as the Vituli Non-Plan Option.

   ZIRKMAN NON-PLAN OPTION  AGREEMENT.    In connection with the
MD Closing, Holdings granted to Joseph A. Zirkman a nonqualified
stock  option (the "Zirkman Non-Plan Option")  to  purchase  368
shares of  Common  Stock at an exercise price of $101.7646.  The
Zirkman Non-Plan Option  shall have a term of ten years from the
date of grant and shall become exercisable in five substantially
equal parts on the five consecutive anniversaries of the date of
grant.  The Zirkman Non-Plan  Option will have substantially the
same terms as the Vituli Non-Plan Option.

ITEM 12.    SECURITY OWNERSHIP  OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT


PRINCIPAL STOCKHOLDERS

   The following tables set forth the number and percentage of
shares of voting common stock of the Company and of Holdings
beneficially owned, as of March 15, 1998, by (i) all persons
known by the Company to be the beneficial owners of more than 5%
of the shares of such voting common stock, (ii) each Director of
the Company who owns shares of such voting common stock, (iii)
each executive officer of the Company included in the Summary
Compensation Table above and (iv) all executive officers and
Directors of the Company as a group.


                                            SHARES BENEFICIALLY
OWNED (a)
<TABLE>
<CAPTION>
                                                                  NUMBER                                                  PERCENTAGE
<S>                                                       <C>                     <C>
STOCKHOLDERS OF CARROLS CORPORATION:
Carrols Holdings Corporation
                                        968 James Street                       10                                              100%
                                        Syracuse, New
York 13203
STOCKHOLDERS OF CARROLS HOLDINGS CORPORATION:
Atlantic Restaurants, Inc.
                                                                          566,667                                              47.8%
Madison Dearborn Capital Partners, L.P.                                   283,333                                              23.9%
Madison Dearborn Capital Partners, L.P. II                                283,334                                              23.9%
EXECUTIVE OFFICERS AND DIRECTORS:
Alan Vituli (b)                                                            36,633                                              3.1%
Daniel T. Accordino                                                        15,316                                              1.3%
Joseph A. Zirkman                                                             385                                              -
                                                                                                      --
Paul R. Flanders                                                              375                                              -
                                                                                                      --
Richard H. Liem                                                               125                                              -
                                                                                                      --
Directors and executive officers of Carrols
                                               as a group                  52,959                                              4.5%
(12 persons)
</TABLE>


(h) As used in this table, "beneficial  ownership"  means the
   sole or shared power to vote, or to direct the voting  of,
   a  security,  or  the sole or shared investment power with
   respect to a security.   For  purposes  of  this  table, a
   person  is  deemed  as  of  any  date  to have "beneficial
   ownership" of any security that such person  has the right
   to acquire within 60 days after such date.  The  number of
   shares shown in the table includes stock options which are
   currently  exercisable  or  exercisable within 60 days  to
   purchase:  26,806 shares held by Mr. Vituli; 14,456 shares
   held by Mr. Accordino; 262 shares held by Mr. Zirkman; 375
   shares held by Mr. Flanders;  and,  125 shares held by Mr.
   Liem.

(i) Includes 20,910 vested stock options  contributed  to and
   held by the Vituli Family Trust.


ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

                               None





<PAGE>
 ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                            ON FORM 8K



            CARROLS CORPORATION AND SUBSIDIARIES:
<TABLE>
<CAPTION>

(a)  (a)     FINANCIAL STATEMENTS
<S>                                                                                    <C>

                                                                                       PAGE
      Opinion of Independent Certified Public Accountants
                                                                                       F-1 to F-2
      Financial Statements:
      Consolidated Balance Sheets
                                                                                       F-3 to F-4
      Consolidated Statements of Operations
                                                                                       F-5
      Consolidated Statements of Stockholders' Equity (Deficit)
                                                                                       F-6
      Consolidated Statements of Cash Flows
                                                                                       F-7 to F-8
      Notes to Consolidated Financial Statements
                                                                                       F-9 to F-18
</TABLE>
       (b)   FINANCIAL STATEMENT SCHEDULES



       SCHEDULE                  DESCRIPTION                             PAGE


        II              Valuation and Qualifying Accounts                F-19

Schedules  other  than  those  listed are omitted for the reason
that  they are not required, not  applicable,  or  the  required
information  is  shown  in  the  financial  statements  or notes
thereto.

   Separate  financial  statements  of the Company are not filed
for the reasons that (1) consolidated  statements of the Company
and its consolidated subsidiaries are filed  and (2) the Company
is primarily an operating Company and all subsidiaries  included
in the consolidated financial statements filed are wholly-owned,
and   indebtedness   of   all   subsidiaries   included  in  the
consolidated financial statements to any person  other  than the
Company  does not exceed 5% of the total assets as shown by  the
Consolidated Balance Sheet at December 31, 1997.








<PAGE>
            (c)     EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K


<TABLE>
<CAPTION>
     EXHIBIT NUMBER                                                                                  INCORPORATED BY
                                                 DESCRIPTION                                           REFERENCE
<S>                      <C>                                                         <C>
2.1                      Purchase and Sale Agreement dated                           Exhibit 2.1 to the Company's 1994 Annual
                         February 10, 1994 between Carrols Corporation, as Purchase, Report on Form 10-K
                         and KIN Restaurant, Inc., as Seller
2.2                      Purchase and Sale Agreement dated April 18, 1994 among      Exhibit 2.2 to the Company's 1994 Annual
                         Carrols Corporation, as Purchaser, and Riva Development     Report on Form 10-K
                         Corporation and John Riva, as Seller
2.3                      Purchase and Sale Agreement dated May 31, 1994 among        Exhibit 2.3 to the Company's 1994 Annual
                         Carrols Corporation, as Purchaser, and Michael P. Jones and Report on Form 10-K
                         Donald M. Cepiel, Sr., and the corporations listed therein
2.4                      Securities Purchase Agreement dated as of March 6, 1996, by Exhibit 2.1 to the Company's current report on
                         and among Atlantic Restaurants, Inc., Carrols Holdings      Form 8-K filed March 21, 1996
                         Corporation, Carrols Corporation and certain Selling
                         Shareholders
2.5                      Deferred Securities Purchase Agreement dated as of March 6, Exhibit 2.2 to the Company's current report on
                         1996 by and among Atlantic Restaurants, Inc., Alan Vituli   Form 8-K filed March 21, 1996
                         and Pryor, Cashman, Sherman & Flynn
3.1                      Restated Certificate of Incorporation                       Exhibit 3.(3)(a) to the Company's 1987 Annual
                                                                                     Report on Form 10-K
3.2                      Certificate of Amendment of the Restated Certificate of     Exhibit 3.2 to the Company's 1996  Annual
                         Incorporation                                               Report on Form 10-K
3.3                      Restated By-laws                                            Exhibit 3.(3)(b) to the Company's 1987 Annual
                                                                                     Report on Form 10-K
4.1                      Indenture dated as of August 17, 1993 among Holdings, the   Exhibit 4.1 to Amendment No. 3 to the
                         Company and Marine Midland Bank, N.A.                       Company's Registration Statement on Form S-1
                                                                                     (Number 3365100) filed August 10, 1993





<PAGE>
10.1                     First Amended and Restated Loan Security and Preferred      Exhibit 10.1 to the Company's 1987 Annual
                         Stock Purchase Agreement by and among Carrols Merger        Report on Form 10-K
                         Corporation, Carrols Holdings Corporation and Heller
                         Financial, Inc. dated as of December 22, 1986
</TABLE>





<PAGE>

<TABLE>
<CAPTION>
     EXHIBIT NUMBER                                                                                  INCORPORATED BY
                                                 DESCRIPTION                                           REFERENCE
<S>                      <C>                                                         <C>
10.2                     Second Amended and Restated Loan and Security Agreement by  Exhibit 10.15 to the Company's 1992 Annual
                         and among Carrols Corporation, Carrols Holdings Corporation Report on Form 10-K
                         and Heller Financial, Inc. dated as of September 15, 1992
10.3                     Senior Subordinated Credit Agreement dated as of September  Exhibit 10.17 to the Company's 1992 Annual
                         15, 1992 between Carrols Corporation, Carrols Holdings      Report on Form 10-K
                         Corporation and World Subordinated Debt Partners, L.P.
10.4                     Third Amended and Restated Loan and Security Agreement by,  Exhibit 10.19 to Amendment No. 2 to the
                         and among Carrols Corporation, Carrols Holdings Corporation Company's Form S-1 Registration Statement
                         and Heller Financial, Inc. dated as of August 9, 1993       filed August 4, 1993
10.5                     First Amendment to Third Amended and Restated Loan and      The Company's 1993 Annual Report on Form 10-K
                         Security Agreement by and among Carrols Corporation,
                         Carrols Holdings Corporation and Heller Financial, Inc.
                         dated as of October 27, 1993
10.6                     Second Amendment to Third Amended and Restated Loan and     The Company's 1993 Annual Report on Form 10-K
                         Security Agreement by and among Carrols Corporation,
                         Carrols Holdings Corporation and Heller Financial, Inc.
                         dated as of March 11, 1994
10.7                     Third Amendment to Third Amended and Restated Loan and      Exhibit 10.9 to the Company's 1994 Annual
                         Security Agreement among Carrols Holdings Corporation,      Report on Form 10-K
                         Carrols Corporation and Heller Financial, Inc. dated as of
                         May 2, 1994
10.8                     Fourth Amendment to Third Amended and Restated Loan and     Exhibit 10.10 to the Company's 1994 Annual
                         Security Agreement among Carrols Holdings Corporation,      Report on Form 10-K
                         Carrols Corporation and Heller Financial, Inc. dated as of
                         December 20, 1994
10.9                     Supply Agreement between ProSource Services Corporation and Exhibit 10.11 to the Company's 1994 Annual
                         Carrols Corporation dated April 1, 1994                     Report on Form 10-K
10.10                    Fifth Amendment to Third Amended and Restated Loan and      Exhibit 10.10 to the Company's 1996  Annual
                         Security Agreement among Carrols Holdings Corporation,      Report on Form 10-K
                         Carrols Corporation and Heller Financing, Inc. dated as of
                         February 22, 1995
</TABLE>





<PAGE>

<TABLE>
<CAPTION>
     EXHIBIT NUMBER                                                                                  INCORPORATED BY
                                                 DESCRIPTION                                           REFERENCE
<S>                      <C>                                                         <C>
10.11                    Sixth Amendment to Third Amended and Restated Loan and      Exhibit 10.11 to the Company's 1996  Annual
                         Security Agreement among Carrols Holdings Corporation,      Report on Form 10-K
                         Carrols Corporation and Heller Financing, Inc. dated as of
                         February 14, 1996
10.12                    Stock Purchase Agreement dated as of February 25, 1997 by   Exhibit 10.12 to the Company's 1996  Annual
                         and among Madison Dearborn Capital Partners, L.P., Madison  Report on
                         Dearborn Capital Partners II, L.P., Atlantic Restaurants,   Form 10-K
                         Inc. and Carrols Holdings Corporation
10.13                    1994 Regional Directors Bonus Plan                          Exhibit 10.19 to the Company's 1994 Annual
                                                                                     Report on Form 10-K
10.14                    Carrols Corporation Corporate Employee's Savings Plan dated Exhibit 10.21 to the Company's 1994 Annual
                         December 31, 1994                                           Report on Form 10-K
10.15                    Commitment Letter from Texas Commerce Bank National         Exhibit 10.15 to the Company's 1996 Annual
                         Association and Chase Securities Inc. and accepted and      Report on Form 10-K
                         agreed to by Carrols Corporation as of January 8, 1997
10.16                    Escrow Agreement dated as of March 6, 1996 by and among     Exhibit 2.3 to the Company's Current Report on
                         Atlantic Restaurants, Inc., Bahrain International Bank      Form 8-K filed March 21, 1996
                         (E.C.), Carrols Holdings Corporation, Carrols Corporation,
                         certain selling shareholders and Baer Marks & Upham L.L.P.
10.17                    Seventh Amendment to Third Amended and Restated Loan and    Exhibit 10.27 to the Company's current report
                         Security Agreement by and among Heller Financial, Inc.,     on Form 8-K filed April 10, 1996
                         Carrols Holdings Corporation and Carrols Corporation dated
                         as of April 3, 1996
10.18                    Amended and Restated Employment Agreement dated as of       Exhibit 10.23 to the Company's Current Report
                         April 3, 1996 by and between Carrols Corporation and Alan   on Form 8-K filed on April 10, 1996
                         Vituli
10.19                    Amended and Restated Employment Agreement dated as of       Exhibit 10.24  to the Company's Current Report
                         April 3, 1996 by and between Carrols Corporation and Daniel on Form 8-K filed on April 10, 1996
                         T. Accordino
10.20                    Carrols Corporation 1996 Long-Term Incentive Plan           Exhibit 10.20 to the Company's 1996  Annual
                                                                                     Report on Form 10-K
10.21                    Stock Option Agreement dated as of December 30, 1996 by and Exhibit 10.21 to the Company's 1996  Annual
                         between Carrols Corporation and Alan Vituli                 Report on Form 10-K
</TABLE>





<PAGE>

<TABLE>
<CAPTION>





<PAGE>





<PAGE>
EXHIBIT NUMBER                                                                                       INCORPORATED BY
                                                 DESCRIPTION                                           REFERENCE
<S>                      <C>                                                         <C>
10.22                    Stock Option Agreement dated as of December 30, 1996 by and Exhibit 10.22 to the Company's 1996  Annual
                         between Carrols Corporation and Daniel T. Accordino         Report on Form 10-K
10.23                    Form of Stockholders Agreement by and among Carrols         Exhibit 10.23 to the Company's 1996  Annual
                         Holdings Corporation, Madison Dearborn Capital Partners,    Report on Form 10-K
                         L.P., Madison Dearborn Capital Partners II, L.P., Atlantic
                         Restaurants, Inc., Alan Vituli, Daniel T. Accordino and
                         Joseph A. Zirkman
10.24                    Form of Registration Agreement by and among Carrols         Exhibit 10.24 to the Company's 1996  Annual
                         Holdings Corporation, Atlantic Restaurants, Inc., Madison   Report on Form 10-K
                         Dearborn Capital Partners, L.P., Madison Dearborn Capital
                         Partners II, L.P., Alan Vituli, Daniel T. Accordino and
                         Joseph A. Zirkman
10.25                    Form of Second Amended and Restated Employment Agreement by Exhibit 10.25 to the Company's 1996  Annual
                         and between Carrols Corporation and Alan Vituli             Report on Form 10-K
10.26                    Form of Second Amended and Restated Employment Agreement by Exhibit 10.26 to the Company's 1996  Annual
                         and between Carrols Corporation and Daniel T. Accordino     Report on Form 10-K
10.27                    Form of Carrols Holdings Corporation 1996 Long-Term         Exhibit 10.27 to the Company's 1996  Annual
                         Incentive Plan                                              Report on Form 10-K
10.28                    Form of Stock Option Agreement by and between Carrols       Exhibit 10.28 to the Company's 1996  Annual
                         Holdings Corporation and Alan Vituli                        Report on Form 10-K
10.29                    Form of Stock Option Agreement by and between Carrols       Exhibit 10.29 to the Company's 1996  Annual
                         Holdings Corporation and Daniel T. Accordino                Report on Form 10-K
10.30                    Form of Unvested Stock Option Agreement by and between      Exhibit 10.30 to the Company's 1996  Annual
                         Carrols Holdings Corporation and Alan Vituli                Report on Form 10-K
10.31                    Form of Unvested Stock Option Agreement by and between      Exhibit 10.31 to the Company's 1996  Annual
                         Carrols Holdings Corporation and Daniel T. Accordino        Report on Form 10-K
10.32                    Form of Unvested Stock Option Agreement by and between      Exhibit 10.32 to the Company's 1996  Annual
                         Carrols Holdings Corporation and Joseph A. Zirkman          Report on Form 10-K

</TABLE>





<PAGE>

<TABLE>
<CAPTION>





<PAGE>





<PAGE>
EXHIBIT NUMBER                                                                                  INCORPORATED BY
                                            DESCRIPTION                                           REFERENCE
<S>                      <C>                                               <C>
10.33                    First Amendment to the Stock Purchase Agreement   Exhibit 10.38 to the Company's current report on Form 8-
                         dated March 27, 1997 by and among Carrols         K filed March 27, 1997
                         Holdings Corporation, Atlantic Restaurants, Inc.,
                         Madison Dearborn Capital Partners, L.P. and
                         Madison Dearborn Capital Partners II, L.P.
10.34                    Purchase and Sale Agreement dated as of January   Exhibit 10.39 to the Company's current report on Form 8-
                         15, 1997 by and between Carrols Corporation, as   K filed March 27, 1997
                         Purchaser, Omega Services, Inc. as Seller and Mr.
                         Harold W. Hobgood as Omega's Agent.
10.35                    Purchase and Sale Agreement dated as of January   Exhibit 10.40 to the Company's current report on Form 8-
                         15, 1997 by and between Carrols Corporation, as   K filed March 27, 1997
                         Purchaser, Omega Services, Inc. as Seller and Mr.
                         Harold W. Hobgood as Omega's Agent.
10.36                    Purchase Agreement dated as of July 7, 1997 among Exhibit 10.41 to the Company's current report on Form 8-
                         Carrols Corporation, as Purchaser, and the        K filed August 20, 1997
                         individuals and trusts listed on Exhibit A
                         attached thereto, as Sellers, the individuals and
                         entities listed on Exhibit B attached thereto, as
                         Affiliated Real Property Owners, and Richard D.
                         Fors, Jr. And Charles J. Mund, as the Seller's
                         representatives
16.1                     Letter re: change in certifying accountant        Exhibit 16.1 to the Company's 1996  Annual Report on
                                                                           Form 10-K
16.2                     Letter re: change in certifying accountant        Exhibit 16.1 to the Company's current report on Form 8-K
                                                                           filed August 15, 1997
22.1                     Subsidiaries of the Registrant:
                         Carrols J.G. Corp., Carrols Realty Holdings
                         Corp., Carrols Realty I Corp., Carrols Realty II
                         Corp., CDC Theater Properties, Inc., H.N.S.
                         Equipment & Leasing Corp., Quanta Advertising
                         Corp., Confectionery Square Corp., Jo-Ann
                         Enterprises, Inc.
27                       Financial Data Schedule
</TABLE>

REPORTS ON FORM 8-K - No current reports on Form 8-K  were filed during
the quarter ended December 28, 1997.





<PAGE>
                           SIGNATURES

   Pursuant  to  the requirements of Section 13 or 15 (d) of the
Securities Exchange  Act of 1934, the Registrant has duly caused
this  report to be signed  on  its  behalf  by  the  undersigned
thereunto duly authorized on the 25th day of March, 1998.

                                                CARROLS
                                                CORPORATION

                                                BY:     /S/ ALAN
                                                VITULI
                                                            Alan
                                          Vituli, Chairman and
                                                           Chief
                                          Executive Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on  the
dates indicated.

      SIGNATURE                           TITLE
  DATE
<TABLE>
<CAPTION>
<S>                                      <C>                                           <C>
/s/ Alan Vituli                          Director, Chairman and Chief                         November 9, 1998
(Alan Vituli)                            Executive Officer
/s/ Daniel T. Accordino                  Director, President and Chief                        November 9, 1998
(Daniel T. Accordino)                    Operating Officer
/s/ Benjamin D. Chereskin                Director                                             November 9, 1998
(Benjamin D. Chereskin)
/s/ James M. Conlon                      Director                                             November 9, 1998
(James M. Conlon)
/s/ David J. Mathies, Jr.                Director                                             November 9, 1998
(David J. Mathies, Jr.)
/s/ C. Ronald Petty                      Director                                             November 9, 1998
(C. Ronald Petty)
/s/ Robin P. Selati                      Director                                             November 9, 1998
(Robin P. Selati)
/s/ Clayton E. Wilhite                   Director                                             November 9, 1998
(Clayton E. Wilhite)
/s/ Paul R. Flanders                     Vice President - Finance                             November 9, 1998
(Paul R. Flanders)                       and Treasurer
/s/ Timothy J. LaLonde                   Vice President - Controller                          November 9, 1998
(Timothy J. LaLonde)
</TABLE>





<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




To the Board of Directors of
 Carrols Corporation


We have audited the consolidated balance sheet of Carrols Corporation (a wholly
owned  subsidiary  of  Carrols  Holdings  Corporation) and Subsidiaries  as  of
December   31,  1997  and the related consolidated  statements  of  operations,
stockholders' equity (deficit)  and cash flows for the years ended December 31,
1997 and December 31, 1995. These  financial  statements are the responsibility
of the Company's management.  Our responsibility  is  to  express an opinion on
these  financial  statements  and  financial statement schedule  based  on  our
audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards require  that  we  plan  and  perform  the audit to
obtain reasonable assurance about whether the financial statements are  free of
material  misstatement.  An audit includes examining, on a test basis, evidence
supporting  the  amounts and disclosures in the financial statements.  An audit
also  includes  assessing   the  accounting  principles  used  and  significant
estimates made by management,  as  well  as  evaluating  the  overall financial
statement presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

In  our opinion, the financial statements referred to above present fairly,  in
all  material   respects,   the  consolidated  financial  position  of  Carrols
Corporation and Subsidiaries  as  of  December  31,  1997, and the consolidated
results of their operations and their cash flows for the  years  ended December
31,  1997  and  December  31,  1995,  in  conformity  with  generally  accepted
accounting principles.

Our  audit  was  conducted  for  the purpose of forming an opinion on the basic
consolidated financial statements  taken as a whole.  The accompanying schedule
for the years ended December 31, 1997 and 1995 as listed in Item 14 of the Form
10-K is presented for purposes of additional  analysis  and  is  not a required
part of the basic consolidated financial statements.  Such information has been
subjected  to  the  auditing  procedures  applied  in  the  audit  of the basic
consolidated financial statements and, in our opinion, is fairly stated  in all
material  respects  in  relation to the basic consolidated financial statements
taken as a whole.


                                          /s/ PricewaterhouseCoopers L.L.P.




Syracuse, New York
February 27, 1998





<PAGE>
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS





To Carrols Corporation:


We  have  audited  the  accompanying  consolidated  balance  sheet  of  Carrols
Corporation (a wholly-owned  subsidiary  of  Carrols  Holdings Corporation) and
subsidiaries  as of December 29, 1996, and the related consolidated  statements
of operations,  stockholder's  deficit, and cash flows for the year then ended.
These consolidated financial statements  and the schedule referred to below are
the  responsibility  of the Company's management.   Our  responsibility  is  to
express an opinion on  these  consolidated  financial  statements  and schedule
based on our audit.

We   conducted  our  audit  in  accordance  with  generally  accepted  auditing
standards.   Those  standards  require  that  we  plan and perform the audit to
obtain reasonable assurance about whether the financial  statements are free of
material misstatement.  An audit includes examining, on a  test basis, evidence
supporting the amounts and disclosures in the financial statements.   An  audit
also   includes  assessing  the  accounting  principles  used  and  significant
estimates  made  by  management,  as  well  as evaluating the overall financial
statement presentation.  We believe that our  audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred  to  above present fairly, in
all  material  respects,  the  financial  position of Carrols  Corporation  and
subsidiaries as of December 29, 1996, and the  results  of their operations and
their cash flows for the year then ended, in conformity with generally accepted
accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole.  The schedule for the year ended December 29, 1996
listed in the index at Item 14 is presented for purposes  of complying with the
Securities  and  Exchange  Commission's  rules  and is not part  of  the  basic
financial  statements.   This  schedule  has  been subjected  to  the  auditing
procedures applied in the audit of the basic financial  statements  and, in our
opinion, fairly states in all material respects the financial data required  to
be  set  forth therein in relation to the basic financial statements taken as a
whole.


                                                      /s/Arthur Andersen LLP




Rochester, New York,
March  7, 1997





<PAGE>
                     CARROLS CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                          DECEMBER 31, 1997 AND 1996
                                  ___________



<TABLE>
<CAPTION>
                              ASSETS                                           1997                         1996
<S>                                                                 <C>                         <C>
Current assets:
  Cash and cash equivalents                                         $  2,252,000                $  1,314,000
  Trade and other receivables, net of reserves
   of $130,000 and $310,000 at 1997 and 1996,
   respectively                                                          748,000                     793,000
  Inventories (Note 2)                                                 3,355,000                   2,163,000
  Prepaid real estate taxes                                              939,000                     725,000
  Prepaid expenses and other current assets                            1,388,000                     932,000
  Refundable income taxes  (Note 5)                                    2,141,000                        -
  Deferred income taxes (Note 5)                                       2,605,000                   3,264,000
    Total current assets                                              13,428,000                   9,191,000
Property and equipment, at cost (Notes 3 and 4):
  Land                                                                 7,280,000                   9,066,000
  Buildings and improvements                                          12,487,000                  16,175,000
  Leasehold improvements                                              43,146,000                  38,816,000
  Equipment                                                           61,331,000                  46,834,000
  Capital leases                                                      14,548,000                  14,548,000
                                                                     138,792,000                 125,439,000
  Less accumulated depreciation
    and amortization                                                 (67,908,000)                (63,356,000)
    Net property and equipment                                        70,884,000                  62,083,000
Franchise rights, at cost less accumulated
  amortization of $25,047,000 and $21,787,000 at
  1997 and 1996, respectively                                        108,938,000                  46,203,000
Intangible assets, at cost less accumulated
  amortization of $8,900,000 and $8,326,000
  at 1997 and 1996, respectively                                       7,864,000                   8,640,000
Other assets                                                           7,778,000                   5,834,000
Deferred income taxes (Note 5)                                         6,436,000                   6,637,000
                                                                    $215,328,000                $138,588,000
</TABLE>




The accompanying notes are an integral part of these financial statements.






<PAGE>
                     CARROLS CORPORATION AND SUBSIDIARIES

                    CONSOLIDATED BALANCE SHEETS (Continued)

                          DECEMBER 31, 1997 AND 1996
                                  ___________



<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY                                           1997                         1996
<S>                                                                 <C>                         <C>
Current liabilities:
  Accounts payable                                                  $ 11,950,000                $  9,319,000
  Accrued interest                                                     4,770,000                   4,741,000
  Accrued payroll, related taxes and benefits                          6,299,000                   4,620,000
  Accrued income taxes                                                      -                      1,058,000
  Other liabilities                                                    5,104,000                   3,875,000
  Current portion of long-term debt (Note 4)                           3,137,000                       8,000
  Current portion of capital lease obligations
   (Note 3)                                                              441,000                     574,000
    Total current liabilities                                         31,701,000                  24,195,000
Long-term debt, net of current portion (Note 4)                      154,649,000                 118,180,000
Capital lease obligations, net of current portion
    (Note 3)                                                           2,060,000                   2,503,000
Deferred income - sale/leaseback of real estate
    (Note 3)                                                           4,555,000                   2,154,000
Accrued postretirement benefits (Note 9)                               1,627,000                   1,522,000
Other liabilities                                                      3,289,000                   1,696,000
        Total liabilities                                            197,881,000                 150,250,000
Commitments and contingencies
Stockholders' equity (deficit) (Note 6):
  Common stock, par value $1; authorized
    1,000 shares, issued and outstanding -
    10 shares                                                                 10                          10
  Additional paid-in capital
                                                                    28,362,990                  1,411,990
  Accumulated deficit
                                                                    (10,916,000)                (10,574,000)
  Less: note receivable - redemption of warrants
                                                                    -___                        (2,500,000)
        Total stockholders' equity (deficit)
                                                                    17,447,000                  (11,662,000)
$215,328,000
                  $138,588,000
</TABLE>







The accompanying notes are an integral part of these financial statements.






<PAGE>
                     CARROLS CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                 YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                  ___________




<TABLE>
<CAPTION>
                                                       1997                    1996                    1995
<S>                                             <C>                     <C>                     <C>
Restaurant sales                                $295,436,000            $240,809,000            $226,257,000
Costs and expenses:
  Cost of sales                                   85,542,000              68,031,000              63,629,000
  Restaurant wages and related
   Expenses                                       89,447,000              70,894,000              65,932,000
  Advertising expense                             13,122,000              10,798,000               9,764,000
  Other restaurant operating
   expenses                                       61,691,000              48,683,000              45,635,000
  Administrative expenses                         13,121,000              10,387,000              10,434,000
  Depreciation and amortization                   15,102,000              11,015,000              11,263,000
  Costs associated with change of
   control                                                 -                 509,000                       -
   Total operating expenses                      278,025,000             220,317,000             206,657,000
Operating income                                  17,411,000              20,492,000              19,600,000
Interest income (Note 5)                            (983,000)                      -                       -
Interest expense                                  15,581,000              14,209,000              14,500,000
Income before income taxes                        2,813,000                6,283,000               5,100,000
Provision (benefit) for income taxes
   (Note 5)                                         655,000                3,100,000              (9,826,000)
Net Income                                      $ 2,158,000             $  3,183,000            $ 14,926,000
</TABLE>












The accompanying notes are an integral part of these financial statements.













<PAGE>
                     CARROLS CORPORATION AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                 YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                  ___________



<TABLE>
<CAPTION>
                                                                                                                       TOTAL
<S>                                 <C>            <C>                <C>                    <C>                <C>
                                                       ADDITIONAL                                                  STOCKHOLDERS'
                                        COMMON           Paid-in            ACCUMULATED             Notes             EQUITY
                                         STOCK           CAPITAL              DEFICIT            RECEIVABLE          (DEFICIT)
Balance at December 31, 1994        $  10          $ 1,474,990        $(28,683,000)          $    -             $(27,208,000)
Net income                                                              14,926,000                                14,926,000
Dividends declared                                    (636,000)                                                     (636,000)
Exercise of stock options                                2,000                                                         2,000
Balance at December 31, 1995           10              840,990         (13,757,000)               -              (12,916,000)
Net income                                                               3,183,000                                 3,183,000
Dividends declared                                  (1,000,000)                                                   (1,000,000)
Exercise of stock options                               12,000                                                        12,000
Tax benefit from sale of
  stock options due to
  change of control                                  1,559,000                                                     1,559,000
Loan to purchase warrants                                                                    (2,500,000)          (2,500,000)
Balance at December 31, 1996           10            1,411,990         (10,574,000)          (2,500,000)         (11,662,000)
Net income                                                               2,158,000                                 2,158,000
Dividends declared                                  (4,338,000)                                                   (4,338,000)
Capital contribution                                30,382,000                                                    30,382,000
Tax benefit from sale of
  stock options due to
  change of control                                    907,000                                                       907,000
Redemption of warrants                                                  (2,500,000)            2,500,000
Balance at December 31, 1997        $  10          $28,362,990        $(10,916,000)          $         -         $ 17,447,000
</TABLE>










The accompanying notes are an integral part of these financial statements.







<PAGE>
                     CARROLS CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                  ___________


<TABLE>
<CAPTION>
                                                                      1997                    1996                    1995
<S>                                                          <C>                     <C>                     <C>
Cash Flows From Operating Activities:
 Net income                                                  $  2,158,000            $  3,183,000            $ 14,926,000
  Adjustments to reconcile net income
  To net cash provided by operating activities:
      (Gain) loss on disposal of property equipment              (344,000)               (314,000)                156,000
      Depreciation and amortization                            15,102,000              11,015,000              11,263,000
      Deferred income taxes                                       860,000                 160,000             (10,061,000)
  Changes in operating assets and liabilities:
      Refundable income taxes                                  (2,141,000)                  -                       -
      Trade and other receivables                                  45,000                (105,000)               (156,000)
      Inventories                                                (588,000)                129,000                 (38,000)
      Prepaid real estate tax expenses and other
        current assets                                           (731,000)               (174,000)                (45,000)
      Other assets                                               (149,000)               (611,000)                (80,000)
      Accounts payable                                          2,631,000                 410,000               1,363,000
      Accrued payroll, related tax and benefits                 1,286,000                (256,000)                297,000
      Accrued income taxes                                     (1,058,000)                983,000                  48,000
      Other liabilities - current                               1,229,000                 266,000                (893,000)
      Accrued interest                                             29,000                 (68,000)                (90,000)
      Other liabilities - long-term                             1,593,000                (231,000)                 84,000
      Other                                                        18,000                 (65,000)                (92,000)
Net cash provided from operating activities                    19,940,000              14,322,000              16,682,000
Cash Flows For Investing Activities:
  Capital expenditures:
   New restaurant development                                  (9,732,000)              5,280,000)             (2,767,000)
   Remodels                                                    (3,807,000)             (6,656,000)             (2,524,000)
   Other capital expenditures                                  (4,671,000)             (3,319,000)             (2,731,000)
  Acquisition of restaurants                                  (78,485,000)             (7,945,000)               (516,000)
  Notes and mortgages issued                                            -                (749,000)             (2,503,000)
  Payments received on notes and mortgages                         88,000                  39,000                  32,000
  Disposal of property, equipment
   And franchise rights                                         1,224,000               2,342,000                  17,000
  Other investments                                                     -               1,330,000              (1,356,000)
Net cash used for investing activities                        (95,383,000)            (20,238,000)            (12,348,000)
</TABLE>



The accompanying notes are an integral part of these financial statements.








<PAGE>
                     CARROLS CORPORATION AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF CASH FLOWS, (Continued)

                 YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                 ___________



<TABLE>
<CAPTION>
                                                                      1997                   1996                    1995
<S>                                                          <C>                    <C>                     <C>
Cash Flows From Financing Activities:
  Proceeds from long-term debt, net                          $ 62,614,000           $ 2,997,000             $  4,376,000
  Principal payments and retirements of
   long-term obligations                                      (26,184,000)           (2,047,000)              (9,184,000)
  Proceeds from sale-leaseback transactions                    13,000,000             4,246,000                  861,000
  Dividends paid                                               (4,338,000)           (1,000,000)                (636,000)
  Exercise of employee stock options and
   related tax benefits                                           907,000             1,571,000                    2,000
  Capital contribution                                         30,382,000                     -                        -
Net cash provided from (used for) financing activities         76,381,000             5,767,000               (4,581,000)
Net increase (decrease) in cash and cash equivalents              938,000              (149,000)                (247,000)
Cash and cash equivalents, beginning of year                    1,314,000             1,463,000                1,710,000
Cash and cash equivalents, end of year                       $  2,252,000           $ 1,314,000             $  1,463,000
Supplemental disclosures:
  Interest paid on debt                                      $ 15,552,000           $14,277,000             $ 14,590,000
  Income taxes paid                                          $  1,456,000           $   393,000             $    153,000
</TABLE>










The accompanying notes are an integral part of these financial
statements.








<PAGE>

                 CARROLS CORPORATION AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                           ________________

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION - The consolidated financial statements include
the  accounts   of  Carrols  Corporation  and  its  subsidiaries  (the
"Company").   All  significant  intercompany  transactions  have  been
eliminated in consolidation.  The Company is a wholly-owned subsidiary
of Carrols Holdings Corporation ("Holdings").

At December 31, 1997 the Company  operated,  as  franchisee,  335 fast
food   restaurants  under  the  trade  name  "Burger  King"  in  seven
Northeastern,  four Midwestern and two Southeastern states.  According
to publicly available  information the Burger King brand is the second
largest franchised restaurant system in the world.  The Company is the
largest independent Burger King franchisee in the United States.

Cash and Cash Equivalents  -  The  Company considers all highly liquid
investments with a maturity of three  months or less when purchased to
be cash equivalents.

INVENTORIES - Inventories are stated at  the  lower of cost (first-in,
first-out) or market.

PROPERTY AND EQUIPMENT - Property and equipment  are recorded at cost.
Depreciation  and  amortization  is  provided using the  straight-line
method over the following estimated useful lives:

<TABLE>
<CAPTION>
Buildings and improvements                               5 to 20 years
<S>                                                      <C>
Leasehold improvements                                   Remaining life of lease including renewal options or life of asset
                                                         whichever is shorter
Equipment                                                3 to 10 years
Capital leases                                           Remaining life of lease
</TABLE>

Depreciation  expense  for the years ended December 31, 1997, 1996 and
1995 was $9,718,000, $7,300,000 and $7,594,000, respectively.

FRANCHISE RIGHTS - Fees  for  initial  franchises and renewals paid to
Burger King Corporation are amortized using  the  straight-line method
over  the  term of the agreement, generally twenty years.  Acquisition
costs  allocated   to   franchise   rights  are  amortized  using  the
straight-line method, principally over  the  remaining  lives  of  the
acquired  leases  including  renewal options, but not  in excess of 40
years.

INTANGIBLE ASSETS - Intangible  assets consist primarily of beneficial
leases which are amortized using  the  straight-line  method  over the
lives of the leases including renewal options, but not in excess of 40
years.

LONG-LIVED  ASSETS  -  The  Company  assesses  the  recoverability  of
property  and  equipment,  franchise  rights and  intangible assets by
determining  whether  the amortization of  these  assets,  over  their
respective remaining lives,  can  be  recovered  through  undiscounted
future  operating cash flows.  Impairment is reviewed whenever  events
or changes  in  circumstances  indicate  the carrying amounts of these
assets may not be fully recoverable.

DEFERRED  FINANCING  COSTS  - Financing costs  incurred  in  obtaining
long-term debt are capitalized  and  amortized  over  the  life of the
related debt on an effective interest basis for costs associated  with
the  Company's unsecured senior notes and on a straight-line basis for
costs associated with the Company's advance loan facility.






<PAGE>
INCOME  TAXES  - The Company and its subsidiaries were included in the
consolidated federal income tax return of Holdings through the date of
the  change  of control  at  April  3,  1996.   The  Company  and  its
subsidiaries have  filed  separate  federal income tax returns for the
period April 4, 1996 to December 31,  1996 and the year ended December
31, 1997.

ADVERTISING COSTS - All advertising costs are expensed as incurred.

USE  OF  ESTIMATES  -  The  preparation  of  financial  statements  in
conformity  with  generally  accepted accounting  principles  requires
management to make estimates and  assumptions that affect the reported
amounts of assets and liabilities and  disclosure of contingent assets
and  liabilities at the date of the financial  statements.   Estimates
also affect  the  reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL  INSTRUMENTS - The following methods were used
to estimate the fair value  of each class of financial instruments for
which it is practicable to estimate that fair value:

      Current Assets and Liabilities  - The carrying value of cash and
      cash equivalents and accrued liabilities approximates fair value
      because of the short maturity of those instruments.

      Senior Notes - The fair value of senior notes is based on quoted
      market  prices.   The  fair  value  at   December  31,  1997  is
      approximately $113,557,000.

      Revolving   and  Advance  Loan  Facilities  -  Rates   currently
      available to  the  Company  for  debt  with  similar  terms  and
      remaining  maturities  are  used  to  estimate  fair  value. The
      recorded  amount,  as  of  December 31, 1997, approximates  fair
      value.

Stock-Based Compensation - On January  1,  1996,  the  Company adopted
Statement  of Financial Accounting Standards No. 123, "Accounting  for
Stock-Based  Compensation,"  (SFAS  123)  which  permitted entities to
recognize as an expense over the vesting period the  fair value of all
stock-based awards on the date of grant.  Alternatively, SFAS 123 also
allowed  entities to continue to apply the provisions of  APB  25  and
provide pro  forma  net  income  disclosures for employee stock option
grants as if the fair-value-based  method defined in SFAS 123 has been
applied.  The Company has elected to  continue to apply the provisions
of APB 25 and provide the pro forma disclosure provisions of SFAS 123.

Fiscal Year - The Company uses a 52-53  week fiscal year ending on the
Sunday  closest  to  December  31. The financial  statements  included
herein are as of December 28, 1997  (52  weeks), December 29, 1996 (52
weeks), and December 31, 1995 (52 weeks).

RECLASSIFICATIONS  -  Certain  amounts  for  prior   years  have  been
reclassified to conform to the current year presentation.


2.  INVENTORIES

Inventories at December 31, consisted of:
<TABLE>
<CAPTION>
                                                               1997                    1996
<S>                                                  <C>                      <C>
Raw materials (food and paper products)              $ 2,111,000              $ 1,386,000
Supplies                                               1,244,000                  777,000
                                                     $ 3,355,000              $ 2,163,000
</TABLE>






<PAGE>
3.  LEASES

The  Company  utilizes  land  and  buildings  in  its operations under
various   lease  agreements.  These leases are generally  for  initial
terms of twenty years and, in most  cases, contain renewal options for
two to four additional five year periods.  The rent payable under such
leases is generally a percentage of sales with a provision for minimum
rent.  In addition, most leases require  payment  of  property  taxes,
insurance and utilities.

Deferred  gains  have  been  recorded  as  a  result of sale/leaseback
transactions  and are being amortized over the lives  of  the  leases.
These leases are  operating  leases,  with  a twenty year primary term
with four five-year renewal options and provide  for  additional  rent
based on a percentage of sales in excess of predetermined levels.  The
net  deferred  gain  is $4,555,000 and $2,154,000 at December 31, 1997
and  1996,  respectively.    Accumulated  amortization  pertaining  to
capital leases for the years ended  December  31,  1997  and  1996 was
$9,951,000 and $9,151,000, respectively.

Minimum  rent  commitments under noncancelable leases at December  31,
1997 were as follows:

<TABLE>
<CAPTION>
                                                                  CAPITAL                   OPERATING
<S>                                                     <C>                        <C>
Years Ending:
  1998                                                  $   758,000                $ 18,807,000
  1999                                                      541,000                  17,884,000
  2000                                                      480,000                  17,470,000
  2001                                                      469,000                  16,889,000
  2002                                                      429,000                  16,069,000
  2003 and thereafter                                     1,329,000                 123,819,000
Total minimum lease payments                              4,006,000                $210,938,000
 Less amount representing interest                        1,505,000
Total obligations under capital leases                    2,501,000
 Less current portion                                       441,000
Long term obligations under capital leases              $ 2,060,000
</TABLE>


Total  rent  expense on operating leases, including percentage rent on
both operating  and  capital  leases,  for the past three years was as
follows:


<TABLE>
<CAPTION>
                                                         1997                      1996                     1995
<S>                                            <C>                       <C>                      <C>
Minimum rent on real property                  $ 15,303,000              $ 11,590,000             $ 11,108,000
Additional rent based on a
  percentage of sales                             3,099,000                 2,700,000                2,548,000
Equipment rent                                      162,000                   167,000                  164,000
                                               $ 18,564,000              $ 14,457,000             $ 13,820,000
</TABLE>







<PAGE>
4.  LONG-TERM DEBT


Long-term debt at December 31 consisted of:

<TABLE>
<CAPTION>
                                                               1997                      1996
<S>                                                  <C>                       <C>
Collateralized:
  Revolving loan facility
                                                     $  2,500,000              $  4,669,000
  Acquisition loan
                                                     -                         5,000,000
  Advance term loan facility
                                                     46,786,000                -
  Other notes payable with interest

rates to 10%                                         863,000                   857,000
Unsecured 11.5% senior notes
                                                     107,637,000               107,662,000

                                                     157,786,000               118,188,000
Less current portion
                                                     3,137,000                 8,000

                                                     $154,649,000              $118,180,000
</TABLE>

The  Company  issued  $110 million of unsecured senior notes in August
1993.  The senior notes  bear  interest  at  a  rate of 11.5%, payable
semi-annually on each February 15 and August 15,  and  are  due August
15,  2003.  The notes are redeemable at  the option of the Company  in
whole  or in part on or after August 15, 1998 at a price of 104.31% of
the principal amount if redeemed before August 15, 1999 and 102.88% of
the principal  amount  if  redeemed before August 15, 2000, with other
specified redemption prices  thereafter.   Provisions of the revolving
line  of  credit  facility  place  limitations on  the  redemption  or
repurchase of the notes so long as the facility remains in effect.

On March 27, 1997, the Company entered  into  a  loan  agreement  (the
"Loan  Agreement")  among  the  Company,  Texas Commerce Bank National
Association, as Agent, and other lenders (collectively  the "Lenders")
who  are  parties  thereto.   The  Loan  Agreement  provides for:  (i)
$127,000,000  Advance Term Loan Facility under which the  Company  may
borrow, through  December  31,  1999,  up to 75% of the purchase costs
incurred in connection with the acquisition of restaurants and; (ii) a
$25,000,000  Revolving  Loan  Facility which  replaced  the  Company's
previous revolving credit facility.   The  Revolving  Loan Facility is
available  to  finance  restaurant  acquisitions  and  new  restaurant
development by the Company, and for other working capital and  general
corporate  purposes.  At December 31, 1997, $21,525,000  was available
for use under the Revolving Loan Facility after reserving $975,000 for
a letter of credit guaranteed by the facility.

The Loan Agreement  provides  for  interest  rate  options of: (i) the
greater of the prime rate (or the Federal Funds Rate plus .50%) plus a
variable margin between 0% and 1% (1% at December 31,  1997);  or (ii)
the London Interbank offering rate plus a variable margin between 1.5%
and  2.5%  (2.5%  of  December 31, 1997), based upon debt to cash flow
ratios.  Commitment fees  on  the  unused balances of the Advance Term
Loan Facility and the Revolving Loan Facility are payable quarterly at
the annual rates of 0.25% and 0.375%, respectively.

The Revolving Loan Facility has a maturity  date  of December 31, 2001
while  the  Advance  Term  Loan Facility requires quarterly  principal
repayments at an annual rate  of  6%  beginning  with  the  end of the
second  quarter  after  each  advance loan and increasing 2% per  year
through the sixth year, with the remainder repayable on June 30, 2003.

The  $5  million acquisition loan  was  collateralized  by  twenty-two
restaurants acquired during 1994.   This loan was paid in full in 1997
and refinanced under the Company's Advance Term Loan Facility.

Substantially  all assets of the Company are or will be pledged to the
lender as collateral  under  the  loans  made  pursuant  to  the  Loan
Agreement.






<PAGE>
Restrictive  covenants  of  the  senior  notes  and the revolving loan
facility  include  limitations  with  respect  to  the   issuance   of
additional  debt  and  redeemable preferred stock; the sale of assets;
dividend payments and  capital  stock  redemption;  transactions  with
affiliates;  investments;  consolidations,  mergers  and  transfers of
assets and minimum interest and fixed charge coverage ratios.


At  December  31,  1997,  principal payments required on all long-term
debt are as follows:

<TABLE>
<CAPTION>
1998                                               $  3,137,000
<S>                                                <C>
1999                                                  4,274,000
2000                                                  5,153,000
2001                                                  8,486,000
2002                                                  6,438,000
2003 and thereafter                                 129,798,000
                                                   $157,286,000
</TABLE>


5.  INCOME TAXES

The  income  tax provision (benefit) was comprised of the following at
December 31:

<TABLE>
<CAPTION>
                                              1997                   1996                   1995
<S>                                  <C>                    <C>                    <C>
Current:
  Federal                            $  887,000             $  981,000               $   35,000
  State                                 628,000                400,000                  200,000
                                      1,515,000              1,381,000                  235,000
Deferred:
  Federal                              (672,000)             1,199,000               (8,552,000)
  State                                (188,000)               520,000               (1,509,000)
                                       (860,000)             1,719,000               10,061,000)
                                     $  655,000             $3,100,000             $ (9,826,000)
</TABLE>


The  components  of  deferred  income  tax  assets  and liabilities at
December 31, are as follows:

<TABLE>
<CAPTION>
                                                                1997                       1996
<S>                                                   <C>                       <C>
Deferred tax assets:
  Accounts receivable and other reserves              $   408,000               $   503,000
  Accrued vacation benefits                               508,000                   427,000
  Other accruals                                          168,000                     -
  Deferred gain on sale of real estate                  1,710,000                   853,000
  Postretirement benefits                                 650,000                   602,000
  Capital leases                                          464,000                   463,000
  Property and equipment depreciation                     549,000                   671,000
  Alternative minimum tax credit
   carryforward                                            21,000                     -
  Net operating loss carryforwards                     10,459,000                12,348,000
                                                       14,937,000                15,867,000
Deferred tax liabilities:
  Amortization of franchise rights                      5,896,000                 5,966,000
Net deferred income tax assets                        $ 9,041,000               $ 9,901,000
</TABLE>






<PAGE>
The  Company  has  net  operating  loss  carryforwards  for income tax
purposes  of  approximately  $27  million.   The  net  operating  loss
carryforwards  expire  in  varying  amounts beginning in 2003  through
2010.   Due  to  a change in ownership the  Company  is  limited,  for
Federal tax purposes,  to  a  $4,354,000  utilization of net operating
losses  annually.   Realization  of  the deferred  income  tax  assets
relating  to these net operating losses  is  dependent  on  generating
sufficient  taxable  income  prior  to  the  expiration  of  the  loss
carryforwards.   Based upon results of operations, management believes
it is more likely  than  not that the Company will generate sufficient
future  taxable  income  to fully  realize  the  benefit  of  the  net
operating  loss  carryforwards  and  existing  temporary  differences,
although there can be no assurance of this.  Accordingly, during 1995,
the previously provided valuation allowance was eliminated and the net
deferred tax assets were recognized as a deferred income tax benefit.

A reconciliation of  the  statutory  federal  income  tax  rate to the
effective tax rates for the years ended December 31, is as follows:

<TABLE>
<CAPTION>
                                                         1997                                       1996
<S>                                          <C>                           <C>           <C>
Statutory federal income tax rate            $ 957,000   34.0%                           $2,136,000  34.0%
State income taxes, net of
  federal benefit                              266,000    9.5%                              607,000   9.7%
Nondeductible expenses                         197,000    7.0%                              197,000   3.1%
Tax appeals settlement                        (806,000) (28.7)%                               -        -
Miscellaneous                                   41,000    1.4 %                             160,000   2.5%
                                              $655,000    23.2%                          $3,100,000  49.3%
</TABLE>

Included  in refundable income taxes at December 31, 1997 is  $983,000
of interest  income  associated  with  a  Federal  tax  appeals  claim
settlement.


6.  STOCKHOLDERS' EQUITY (DEFICIT)

THE COMPANY

The  Company  has  1,000 shares of common stock authorized of which 10
shares are issued and  outstanding.  Dividends on the Company's common
stock are restricted to amounts permitted by various loan agreements.

HOLDINGS

The sole activity of Holdings is the ownership of 100% of the stock of
Carrols Corporation. In February 1997,  a  1  for  3.701 reverse stock
split was effected to reduce the outstanding shares of common stock of
Holdings  to  850,000  shares.   As a result of a recapitalization  in
February 1997, the capital structure  of  Holdings  was  as follows at
December 31, 1997:


<TABLE>
<CAPTION>
Class A, preferred stock 10% cumulative redeemable,
<S>                                                                           <C>
         par value $.01, authorized, issued
         and outstanding 3,633 shares at
         liquidation preference
         and redemption price                                                    $3,633,000
Voting common stock, par value $.01, authorized
         3,000,000 shares issued and outstanding
         1,144,144 shares                                                            11,000
</TABLE>






<PAGE>
The  Class  A  preferred  stock  is  subject  to  two  remaining equal
mandatory redemptions, scheduled for December 23, 1998 and  1999.   In
addition,  subject  to  the  redemption  restrictions  of various loan
agreements,  all  preferred  stock  may  be redeemed at the option  of
Holdings, at a price of $1,000 per share,  plus  accrued dividends. In
the  event  that  the scheduled redemptions are not made  timely,  the
annual dividend rate  on  the  amount  of  Class A Preferred Stock not
redeemed is automatically increased to 14%.

Holders of the Preferred Stock are entitled  to  cumulative  dividends
payable  quarterly  at  the rate of 10% per annum.  In the event  that
Holdings fails to pay four  consecutive  quarterly  dividends  on  the
Class  A  preferred  stock,  the subsequent dividend rate increases to
11.5%; if eight consecutive quarterly  dividends  are missed, the rate
increases to 13% per annum until such dividends are paid.

Warrants outstanding at December 31, 1996 to purchase  131,886  shares
of  Holdings  Common  Stock  at  exercise prices of $3.59 to $3.70 per
share were owned by an independent  third  party.   To  facilitate the
sale and purchase of the warrants, Holdings loaned $2,500,000  to  the
purchaser  of  the  warrants  which  loan  was secured by a collateral
pledge  of  the  shares  of the purchaser and of  the  warrants.   The
receivable was reclassified  to  increase  stockholders' deficit as of
December 31, 1996.  In 1997, Holdings exercised its option to purchase
the warrants at an aggregate price of $2,510,000  from the third party
in exchange for payment on the related loan.


CHANGE OF CONTROL TRANSACTIONS

On  April 3, 1996, Holdings, Carrols Corporation and  certain  selling
shareholders  of  Holdings sold approximately 97 percent of the issued
common stock and common  stock  equivalents  (the  Class B Convertible
Preferred  stock,  warrants  to  buy common stock and options  to  buy
common stock) exclusive of the warrants  referred to above to Atlantic
Restaurants, Inc. ("Atlantic").  This change  in  control  resulted in
the Company incurring a one-time charge of $509,000 in fiscal 1996.

On  March  27, 1997, Holdings and Atlantic, its then sole stockholder,
entered into  an  agreement whereby they agreed to sell 283,334 shares
of common stock of  Holdings  to  Madison  Dearborn  Capital  Partners
("Madison   Dearborn"),  an  independent  third  party,  resulting  in
approximately  $30.4  million of new equity for the Company.  Atlantic
also  sold 283,333 of its  shares  of  Holdings  to  Madison  Dearborn
resulting  in  both  Atlantic  and  Madison  Dearborn  having an equal
interest in the Company.

Both  transactions  constituted  a  "change  of  control"  under   the
Indenture governing the Senior Notes Due 2003 ("Notes").  Accordingly,
each  holder  of  the  Notes  had  the right to require the Company to
repurchase  all or any part of such holder's  Notes  at  a  repurchase
price in cash equal to 101% of the principal amount of the Notes being
repurchased plus accrued and unpaid interest in both 1996 and in 1997.
Such redemptions totaled $25,000 in 1997 and $838,000 in 1996.


STOCK OPTIONS

Holdings adopted  an  Employee Stock Option and Award Plan on December
14, 1993 ("The 1993 Plan").  Effective  April  1,  1994, Holdings also
adopted  a  Stock  Option Plan for non-employee directors  ("Directors
Plan"). The Plans allowed  for  the  granting  of  non-qualified stock
options,  stock  appreciation  rights and incentive stock  options  to
directors, officers and certain  other Company employees.  The Company
was  authorized to grant options for  up  to  229,700  shares,  27,000
shares  for  non-employee  directors and 202,700 shares for employees.
Options were generally exercisable  over  5  years with 25,600 options
exerciseable as of December 31, 1995.  As of December  31,  1995, non-
employee directors were granted options totaling 4,900 shares.   Under
the Directors Plan, no options were exercised or canceled during 1995.
During  1996,  57,000  options (36,600 at $14.80 and 20,400 at $22.65)
were canceled by
the sale of such options  in conjunction with the sale to Atlantic and
the plans were canceled.  The remaining 32,426 options were subject to
a  deferred  purchase agreement  whereby  the  sale  and  cancellation
occurred in January, 1997.

A summary of all  option  activity  in the 1993 Plan and the Directors
Plan  for the years ended December 31,  1997,  1996  and  1995  is  as
follows:

<TABLE>
<CAPTION>
                                                       Options at              Options at
<S>                                                    <C>                     <C>
                                                               $14.80                  $22.65
Balance at December 31, 1994                              69,441                      -
  Granted                                                      -                 26,777
  Exercised                                                 (162)                     -
  Canceled                                                (3,350)                  (621)
Balance at December 31, 1995                              65,929                 26,156
  Exercised                                                 (810)                     -
  Canceled                                               (38,098)               (20,751)
Balance at December 31, 1996                              27,021                  5,405
  Canceled                                               (27,021)                (5,405)
Balance at December 31, 1997                                   -                      -
</TABLE>

Holdings  adopted  a stock option plan in 1996 entitled the 1996 Long-
Term Incentive Plan  ("1996  Plan")  and authorized a total of 106,250
shares to be granted at prices ranging  from  $101.77  to  $140.00 per
share.  Options under this plan generally vest over a four year period
There were no outstanding options in fiscal 1996 under this  plan.  In
1997,  options  were granted at prices ranging from $101.77 to $110.00
per share.

A summary of all  option  activity in the 1996 Plan for the year ended
December 31, 1997 was as follows:

<TABLE>
<CAPTION>
                                                       OPTIONS AT                OPTIONS AT
<S>                                                    <C>                       <C>
                                                                $101.77                   $110.00
Balance at December 31, 1996                                -                          -
   Granted                                                72,250                     14,460
   Canceled                                                 -___                       (570)
Balance at December 31, 1997                              72,250                     13,890
Exercisable at December 31, 1997                          34,850                       -___
</TABLE>

In addition, in conjunction  with  the  1997  sale  of Holdings common
stock  to Madison Dearborn, additional options not part  of  the  1996
Plan for 32,427 shares at a price of $101.77 were granted with vesting
over a five  year  period.   None of these options were exercisable at
December 31, 1997.

Had compensation cost been determined based upon the fair value of the
stock options at grant date consistent  with  the  method of SFAS 123,
the  Company's  pro-forma net income for the year ended  December  31,
1997  would have been  $1,527,000  as  compared  with  $2,158,000,  as
reported.

The fair  value  of  each option grant was estimated using the minimum
value  option  pricing  model   with  the  following  weighted-average
assumptions for the year ended December 31, 1997:

<TABLE>
<CAPTION>
Risk-free interest rate                    6.53%
<S>                                        <C>
Annual dividend yield                         0%
Expected life                              5 years
</TABLE>







<PAGE>
7.  LITIGATION

The  Company  is a party to various legal proceedings arising from the
normal course of  business.   Management  believes  adverse  decisions
relating  to  litigation and contingencies in the aggregate would  not
materially effect  the  Company's  results  of operations or financial
condition.


8.  EMPLOYEE SAVINGS PLAN

The Company offers a savings plan for salaried  employees.   Under the
plan, participating employees may contribute up to 10% of their salary
annually.   The  Company's  contributions,  which  begin to vest after
three years and fully vest after seven years of service,  are equal to
50%  of the employee's contributions to a maximum Company contribution
of $530  annually.   The  employees  have  various  investment options
available under a trust established by the plan.  The plan expense was
$208,000, $164,000 and $125,000 for the years ended December 31, 1997,
1996 and 1995, respectively.


9.  POSTRETIREMENT BENEFITS

While the Company reserves the right to change its policy, the Company
provides postretirement medical and life insurance benefits   covering
substantially all salaried employees.
The  following  is  the  plan  status  and  accumulated postretirement
benefit obligation (APBO) at December 31:

<TABLE>
<CAPTION>
                                                                          1997                          1996
<S>                                                          <C>                            <C>
Accumulated benefit obligation:
   Retirees                                                  $   519,000                    $   518,000
   Fully eligible active participants                             28,000                         26,000
   Other active plan participants not fully
     eligible                                                    814,000                        697,000
       Total APBO                                              1,361,000                      1,241,000
   Unrecognized prior service cost                               286,000                        315,000
   Unrecognized net  actuarial losses                            (20,000)                       (34,000)
Accrued postretirement benefit obligation                    $ 1,627,000                    $ 1,522,000
</TABLE>

Net  periodic  postretirement benefit cost for  1997,  1996  and  1995
included the following components:

<TABLE>
<CAPTION>
                                                              1997                  1996                  1995
<S>                                                   <C>                   <C>                   <C>
   Service cost - benefits earned during
     the year                                         $ 69,000              $ 64,000              $ 47,000
   Interest cost on accumulated benefit
     obligation                                         85,000                77,000                76,000
   Net amortization of actuarial
     gains and losses and prior service
     costs                                             (25,000)              (25,000)              (29,000)
                                                      $129,000              $116,000              $ 94,000
</TABLE>

A 6.50% annual rate  of  increase  in  the per capita costs of covered
health  care benefits was assumed for 1997,  gradually  decreasing  to
5.5% by the  year 2001.  Increasing the assumed health care cost trend
rates by one percentage  point  in each future year would increase the
accumulated postretirement benefit  obligation as of December 31, 1997
by $137,000 and increase the sum of the service cost and interest cost
components by $26,000 in 1997.






<PAGE>
For 1997, 1996 and 1995, a discount rate  of  7% was used to determine
the  accumulated  postretirement  benefit obligation.  Actual  benefit
costs paid on behalf of retirees in  1997,  1996 and 1995 was  $24,000
in each year.


10. ACQUISITIONS

On March 28, 1997, the Company purchased certain  assets and franchise
rights  of  twenty-three  Burger King restaurants in North  and  South
Carolina for a cash price of approximately $21 million.

On August 20, 1997, the Company purchased certain assets and franchise
rights of sixty-three Burger  King  restaurants,  primarily in Western
New York State, Indiana and Kentucky for a cash price of approximately
$52 million.

The  following unaudited proforma results of operations  assume  these
acquisitions occurred as of the beginning of the respective periods:

                                                      (Unaudited)
                                                YEAR   ENDED  DECEMBER
31,
<TABLE>
<CAPTION>
                                                      1997                    1996
<S>                                          <C>                     <C>
Revenues                                     $341,889,000            $329,927,000
Operating Income                             $ 21,129,000            $ 28,652,000
Net income                                   $  2,829,000            $  5,603,000
</TABLE>

The unaudited results of operations are not necessarily  indicative of
the  actual  operating  results  that  would  have  occurred  had  the
acquisitions been consummated on January 1 of each fiscal year,  or of
future operating results of the combined companies.

During  the year ended December 31, 1997, the Company acquired a total
of 93 restaurants.   Assets  acquired and liabilities assumed in these
transactions were as follows:

<TABLE>
<CAPTION>
Inventory                                    $   604,000
<S>                                          <C>
Land                                           1,025,000
Buildings and improvements                     1,532,000
Equipment                                     10,221,000
Franchise rights                              65,496,000
Accrued payroll, related taxes
   and benefits                                 (393,000)
                                             $78,485,000
</TABLE>







<PAGE>
                 CARROLS CORPORATION AND SUBSIDIARIES
           SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
             YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                             ___________



<TABLE>
<CAPTION>
               COL. A                        COL. B               COL. C               COL. D                 COL E
<S>                                   <C>                   <C>                 <C>                   <C>
                                                                 Additions
                                           Balance at           Charged to                                 Balance at
                                            Beginning            Costs and                                     End
             DESCRIPTION                    OF PERIOD            EXPENSES            DEDUCTIONS             OF PERIOD
Year ended December 31, 1997:
Reserve for doubtful trade
   accounts receivable                   310,000                 -               (180,000)(b)            130,000
Other reserves (a)                       753,000              133,000                 -                  886,000
Year ended December 31, 1996:
Reserve for doubtful trade
   accounts receivable                   419,000               16,000            (125,000)(b)            310,000
Other reserves (a)                       788,000                                  (35,000)(b)            753,000
Year ended December 31, 1995:
Reserve for doubtful trade
   accounts receivable                   424,000               12,000             (17,000)(b)            419,000
Other reserves (a)                       542,000              388,000            (142,000)(b)            788,000
</TABLE>



(a) Included principally in other assets
(b) Represents write-offs of accounts.